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[Slides] Resale Price Maintenance In The Age Of Showrooming, Jeanine Miklos-Thal, Greg Shaffer

Jeanine Miklos-Thal

We examine the leading pro-competitive justification for RPM, free-riding on dealer services, in today’s context of brick-and-mortar versus online retailing. Market research studies show that many consumers visit a brick-and-mortar store to examine a product and select its features, but then purchase it at a discounted price from an online retailer. An often-voiced concern is that such “showrooming” will discourage traditional retailers from providing demand-enhancing sales services. According to the classic free-riding theory (Telser, 1960), manufacturers can solve this problem by imposing price floors that prevent online retailers from undercutting brick-and-mortar retailers. Counter to this widely used argument, we find …