If a manufacturer does not exercise retail price maintenance, a free-rider problem may become evident among retailers and ultimately lead to:

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If a manufacturer does not exercise retail price maintenance, retailers may engage in price competition, leading to lower prices and ultimately lower profits for the manufacturer. This is because retailers may undercut each other to attract customers, with no regard for the manufacturer's profit margins. As a result, the manufacturer may experience free-riding among retailers, which can lead to a decrease in overall profits.

If a Manufacturer Does Not Exercise Retail Price Maintenance, a Free-Rider