The impact of maximum markup regulation on prices
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Peer-reviewed
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Authors
Genakos, C
Koutroumpis, P
Pagliero, M
Abstract
Markup regulation is a common yet understudied type of regulation. We analyze the repeal of maximum wholesale and retail markup regulation in an oligopolistic and vertically non-integrated market. By comparing the prices of products affected by regulation before and after the policy change and using unregulated products as a control group, we find that abolishing regulation led to a significant decrease in both retail and wholesale prices. The results provide indirect but consistent evidence that markup ceilings provided a focal point for collusion among wholesalers.
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Journal Title
Journal of Industrial Economics
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Volume Title
66
Publisher
Wiley-Blackwell