NDLI: Luxury goods, vertical restraints and internet sales

Content Provider	Springer Nature Link
Author	Pruzhansky, Vitaly
Copyright Year	2012
Abstract	We propose a model describing consumer demand for a luxury good, in which the perceived quality of the good is related to its scarcity. We use this model to analyze the optimal production and price setting decisions of a luxury good manufacturer and contrast them with the decisions that would be made by a social planner. We show that irrespective of the way social welfare is defined, a monopoly producer of the luxury good may select socially optimal prices and quantity. Thus the incentives of the monopolist and the social planner may to some extent be aligned. We also analyze whether the producer and social planner would be willing to sell the luxury good over the internet if this allowed to increase the number of potential customers for the product. We show that under reasonable assumptions the monopoly producer would not oppose the introduction of internet sales, whilst the social planner may do so, depending on the specification of the model’s parameters. This result is important in the light of the recent revision by the European Commission of its Guidelines on Vertical Restrains (2010).
Starting Page	227
Ending Page	246
Page Count	20
File Format	PDF
ISSN	09291261
Journal	European Journal of Law and Economics
Volume Number	38
Issue Number	2
e-ISSN	15729990
Language	English
Publisher	Springer US
Publisher Date	2012-05-29
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Competition policy e-Commerce Internet Vertical restraints Selective distribution Law and Economics European Integration Public Finance & Economics Commercial Law
Content Type	Text
Resource Type	Article
Subject	Business and International Management Law Economics and Econometrics

Sl.	Authority	Responsibilities	Communication Details
1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
5	Website/Portal (Helpdesk)	Queries regarding NDLI and its services	support@ndl.gov.in
6	Contents and Copyright Issues	Queries related to content curation and copyright issues	content@ndl.gov.in
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