Permanent URL to this publication: http://dx.doi.org/10.5167/uzh-51914
Buehler, Stefan; Gaertner, Dennis L (2009). Making Sense of Non-Binding Retail-Price Recommendations. Working paper series / Socioeconomic Institute No. 902, University of Zurich.
This paper provides a theoretical rationale for non-binding retail price recommendations (RPRs) in vertical supply relations. Analyzing a bilateral manufacturer-retailer relationship with repeated trade, we show that linear relational contracts can implement the surplus-maximizing outcome. If the manufacturer has private information about production costs or consumer demand, RPRs may serve as a communication device from manufacturer to retailer. We characterize the properties of efficient bilateral relational contracts with RPRs and discuss extensions to settings where consumer demand is affected by RPRs, and where there are multiple retailers or competing supply chains.
572 downloads since deposited on 29 Nov 2011
121 downloads since 12 months
|Item Type:||Working Paper|
|Communities & Collections:||03 Faculty of Economics > Department of Economics
Working Paper Series > Socioeconomic Institute (former)
|Dewey Decimal Classification:||330 Economics|
|JEL Classification:||D23, D43, L14, L15|
|Deposited On:||29 Nov 2011 20:09|
|Last Modified:||09 Jul 2012 05:01|
|Series Name:||Working paper series / Socioeconomic Institute|
Users (please log in): suggest update or correction for this item
Repository Staff Only: item control page