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Manufacturer Acceptance of Returns

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Abstract

Modelling the retailers’ behaviour explicitly, I extend the model of manufacturer returns policy of Flath and Nariu (1989) by introducing genera] demand conditions under uncertainty. I derive an equivalence theorem between manufacturer acceptance of returns and resale price maintenance (RPM) under conditions of zero marginal cost, risk neutrality and symmetric information. This was first shown by Marvel and Reagan (1986) in a somewhat different context. I also discuss some differences between RPM and returns policy under asymmetric information and risk attitudes.

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Authors and Affiliations

  1. Nanzan University, Japan

    Tatsuhiko Nariu

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  1. Tatsuhiko Nariu
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Additional information

This paper has benefited from discussions with Marc Bremer, David Flath, Motoshige Ito, Masayoshi Maruyama, Hajime Miyazaki, Kaoru Ueda and Yuji Yumoto. Financial support from Daiko Foundation and Nantan University is gratefully acknowledged.

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Nariu, T. Manufacturer Acceptance of Returns. JER 47, 426–431 (1996). https://doi.org/10.1111/j.1468-5876.1996.tb00060.x

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  • DOI: https://doi.org/10.1111/j.1468-5876.1996.tb00060.x

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