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In European competition law, vertical agreements which have the purpose or effect of partitioning a distribution network by customer or by territory, are illegal. One of the exceptions to that rule is that you can restrict a wholesaler from selling to end-users. (This is when your market share is below 30%, if not an individual analysis is needed.)
Why would a producer want to impose such a restriction on its wholesalers? And why are competition authorities ok with that? In other words, what are the economical benefits/procompetitive effects of such a restriction? And are there any negative effects?
Dear economics, if you know the answer (or an answer), please reply. Thanks in advance!

2007-12-01 07:12:51 · 2 answers · asked by Rooooooooo 2 in Social Science Economics

/edit: I just read that last sentence again and I'm guessing that its probably "dear economists" and not "dear economics"... English is not my mothertongue. Don't let this edit distract you from the question and thanks to the person that answered allready ;-)

2007-12-01 08:48:44 · update #1

2 answers

Wholesalers sell at a discount but do not provide the service that retail stores do. Many people will go to a retail store to pick out what they want and then go to the wholesaler to buy. Producers think this will cause retailers to give less attention to their products than to ones that are not available wholesale.

2007-12-01 07:25:43 · answer #1 · answered by meg 7 · 0 0

In an character trouble, sure, if any individual is dumb ample to shop for a lemon for that a lot, it is extra their fault than the dealers fault. They would simply cross purchase a lemon for far much less someplace else. However, in so much areas I consider there are legislation approximately how a lot they are able to cost for merchandise in retail outlets and whatnot. If all lemons all of a sudden fee 100 greenbacks for no cause, it might no longer be OK.

2016-09-05 17:48:56 · answer #2 · answered by ? 4 · 0 0

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