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Review of Industrial Organization

, Volume 8, Issue 6, pp 755–763 | Cite as

The choice between resale price maintenance and exclusive territories: Evidence from litigation

  • David W. Boyd
Article

Abstract

A manufacturer's choice between resale price maintenance (RPM) and exclusive territories to protect dealer provided services is examined empirically. The relative efficacy of RPM in solving the free rider problem depends on the life cycle of the product being distributed. A manufacturer of a product with a long life cycle is more likely to protect its dealers' investment in service with exclusive territories, whereas RPM becomes the more probable restraint for products of short life spans. Data gleaned from vertical restraint litigation strongly support this hypothesis.

Key words

Resale price maintenance exclusive territories 

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Copyright information

© Kluwer Academic Publishers 1993

Authors and Affiliations

  • David W. Boyd
    • 1
  1. 1.Department of EconomicsDenison UniversityGranvilleU.S.A.

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