Competition Law and Economics
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Competition Law and Economics

Developments, Policies and Enforcement Trends in the US and Korea

Edited by Jay P. Choi, Wonhyuk Lim and Sang-Hyop Lee

In this exciting new book, an international team of experts compare market structures, in both global and Korean contexts, particularly focusing on the impact of foreign competition on market concentration and ways to improve market structure. It thoroughly investigates core competition problems, including international abuses of dominance, mergers and collusion, and vertical restraints. Contributions move beyond explaining the laws and practices of enforcement agencies, offering readers an insight into the trend of an ever-increasing interdependence among national economies, complemented by analyses of recent developments in the US and Canada.
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Chapter 8: Competition policy and the economics of vertical restraints

Ralph A. Winter

Abstract

This chapter examines the economic foundations of competition policy toward vertical restraints, with a focus on resale price maintenance (RPM). It outlines the theories of RPM as potentially anticompetitive on the basis that such practices support collusion or exclusion at either the upstream supplier stage of a supply chain or, more rarely, the downstream retail stage. Evidence supporting one or more of these theories should be necessary for intervention because, in a wide range of circumstances, RPM is simply a means of altering the mix of price and nonprice competition among downstream retailers. Against the background of economic theory, the author outlines six fallacies that appear in the policy literature in this area, and extends the discussion to other vertical restraints.

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