Salience and Online Sales: The Role of Brand Image Concerns
Markus Dertwinkel-Kalt () and
Mats Köster
No 6787, CESifo Working Paper Series from CESifo
Abstract:
We provide a novel intuition for the observation that many brand manufacturers have restricted their retailers’ ability to resell brand products online. Our approach builds on models of salience according to which price disparities across distribution channels guide a consumer’s attention toward prices and lower her appreciation for quality. Thus, absent vertical restraints, one out of two distortions - a quality or a participation distortion - can arise in equilibrium. The quality distortion occurs if the manufacturer provides either an inefficiently low quality under price salience or an inefficiently high quality in order to prevent price salience. The participation distortion arises as offline sales might be entirely abandoned in order to prevent prices from becoming salient. Both distortions are ruled out if vertical restraints are imposed. As opposed to the current EU legislation that considers a range of vertical restraints as being hardcore restrictions of competition per se, we show that these constraints can be socially desirable if salience effects are taken into account.
Keywords: salience; online sales; antitrust; vertical restraints; distribution channels (search for similar items in EconPapers)
JEL-codes: D21 K21 L42 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-com, nep-law, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)
Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp6787.pdf (application/pdf)
Related works:
Working Paper: Salience and Online Sales: The Role of Brand Image Concerns (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6787
Access Statistics for this paper
More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().