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Author Question: A manufacturer that is trying to avoid the double marginalization problem can do so by encouraging ... (Read 48 times)

ishan

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on: Jul 1, 2018
A manufacturer that is trying to avoid the double marginalization problem can do so by encouraging competition rather than protecting retailers through exclusive territories, and controlling final product price through resale price maintenance
 
  contracts. Indicate whether the statement is true or false

Question 2

Which of the following could prevent the opportunistic behavior of firms?
 
  A) efficient contracts
  B) good reputation
  C) revealing relevant information about firms
  D) All of the above


jazzlynnnnn

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Reply #1 on: Jul 1, 2018
Answer to Question 1

T In principle, this is true, because if discounting can be avoided through resale price maintenance, competition among retailers can avoid double marginalization. As Chapters 8 and 9 will show, resale price maintenance may not be permitted under antitrust law.

Answer to Question 2

D


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