Commercial negotiations between manufacturers and retailers
necessarily involve a discussion of wholesale prices, but they may
also involve a discussion of potential retail prices, including
recommendations of retail prices by manufacturers (RRPs). Retail
prices not only determine how much money a retailer will make, but
also how much product the manufacturer will sell. Furthermore
large retailers may have little idea of how to price specialist
products, something on which manufacturers have often
undertaken significant amounts of research.
How capacity constraints shape unilateral price effects in horizontal mergers
Examples include hospitals with a fixed number of beds, and hotels with a fixed number of rooms. In the article “Unilateral Price Effects in Horizontal...