A manufacturer that is trying to avoid the “double marginalization pro

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

ANSWER

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.