1. 10 marks). Explain the causes and effects of Resale Price Maintenance (RPM). If RPM is not...
Question:
1. 10 marks). Explain the causes and effects of Resale Price Maintenance (RPM). If RPM is not legal than explain what other vertical restraints can be used to achieve the same outcome. Explain the empirical evidence regarding the effects of RPM and which theories are consistent with this evidence.
2. 10 marks). Explain why manufacturers grant exclusive territories (ET) to their dealers. Explain whether ET gives rise to double marginalization and if so how this problem can be overcome. Use the car dealership evidence to explain the alternative vertical restraints that can be used if ET is illegal.
3. (10 marks). Explain the causes and effects of manufacturers imposing exclusive dealing on their dealers. Explain which of the exclusive dealing theories are supported by evidence from the beer industry