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• W2053438416 abstract "We model retail-price recommendations (RPRs) as a communication device in vertical supply relations with private manufacturer information on production costs and consumer demand. With static trade, RPRs are irrelevant, and the equilibrium outcome is inefficient. With repeated trade, RPRs can become part of a relational contract, communicating private information from manufacturer to retailer that is indispensable for maximizing joint surplus. We show that this contract is self-enforcing if the retailer's profit is independent of production costs and punishment strategies are chosen appropriately. The predictions of our analysis are consistent with the available empirical evidence. (JEL D21, D24, L11, L14, L22, L60, L81)" @default.
• W2053438416 created "2016-06-24" @default.
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• W2053438416 date "2013-02-01" @default.
• W2053438416 modified "2023-09-30" @default.
• W2053438416 title "Making Sense of Nonbinding Retail-Price Recommendations" @default.
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• W2053438416 doi "https://doi.org/10.1257/aer.103.1.335" @default.
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