Resale Price Maintenance and Consumer Search

Abstract

We provide a novel pro-competitive rationale for minimum resale price mainte-nance (RPM). In our model some consumers are fully informed about downstream prices while other consumers are not. When an upstream manufacturer imposes a floor on downstream prices, this changes not just the level of downstream prices but also their dispersion. The manufacturer optimally imposes a price floor which just eliminates all downstream price dispersion, and this leads to both higher (aggre-gate) consumer surplus and higher total welfare as compared to the case without RPM. We also show that when downstream entry is costly, minimum RPM can outperform maximum RPM.

Keywords

Reference

Andrew Rhodes, and Yang Yang, “Resale Price Maintenance and Consumer Search”, TSE Working Paper, n. 25-1695, November 2025, revised June 2026.