Academic and policy circles have longed been concerned with how product market rivalry affects firm investment in innovation. This projects aims to revisit this issue by looking at wide impacts on innovative policies of firms, stemming from one particular change in the degree of competition – an exogenous shock to the costs of price-fixing collusion.
Minimum resale price maintenance (RPM) is a vertical contract between manufacturers and retailers that requires the retailers sell the manufacturers’ products at or above a price floor set by the manufacturers. To facilitate rule-of-reason-based antitrust policy toward RPM, the research project aims to develop an empirical model to quantify one of the potential pro-competitive effects of RPM, inline with Deneckere et al.(1996,1997)’s theory. The model will then be applied to the data from Japanese publishing industry, in which RPM is allowed as a special exemption.