Resale Price Maintenance and Quality Certification

Abstract

Resale price maintenance (RPM) has been applied to a number of products that do not seem to require tangible presale dealer services. This article explains why RPM might exist in these instances. We show that RPM will be adopted when a manufacturer wishes to purchase quality or style certification from reputable dealers. We demonstrate that manufacturers will desire to adopt RPM even when they are permitted to shape the set of stores handling their products through refusals to deal. Although we do not claim that this is the only explanation of RPM, we nevertheless believe that our explanation has wide applicability.