On what basis do economists claim that a resale price maintenance agreement is NOT anti-competitive
A)Suppliers cannot exercise noncompetitive market power.
B)If a supplier has market power, it will be likely to exert that power through wholesale price rather than retail price.
C)Retail markets are inherently noncompetitive.
D)Retail cartel agreements cannot increase retail profits.

Question

Quizplus · Accepted Answer

Economists claim that a resale price maintenance agreement is NOT anti-competitive on the basis that if a supplier has market power, it will be likely to exert that power through wholesale price rather than retail price. Therefore, by setting a minimum resale price, the supplier can protect smaller retailers from larger ones that may try to undercut them on price and create a more even playing field. This argument suggests that resale price maintenance agreements do not necessarily harm competition and may have some pro-competitive benefits.

On What Basis Do Economists Claim That a Resale Price