Question $4(14$ marks$)$

$($a$)$ Consider the market for consumer electronics. These are complex products for which sales

effort is important.

Now suppose that one retailer makes a large investment in sales effort, so that it attracts a

large number of consumers to its store; and suppose also that a second retailer makes no

investment in sales effort but sells at a lower price than the first retailer.

The outcome is that many price$-$conscious consumers will visit the first retailer to learn about

the available products; and then visit the second retailer to purchase the preferred product at a

low price.

Suggest one vertical restraint that can solve the above$-$mentioned problem and explain the

rationales.

$($b$)$ Besides the vertical restraint that you suggested in part $($a$),$ name two other types of vertical

restraints.