Monday, September 27, 2010

Resale Price Maintenance by Japanese Newspapers

Posted by D. Daniel Sokol

David Flath (Osaka University) addresses Resale Price Maintenance by Japanese Newspapers.

ABSTRACT: In Japan, newspapers enjoy a special exemption from antimonopoly prohibitionsagainst resale price maintenance (suppliers’ stipulations that bar downstreamfirms from price discounting), but are each required to set uniform pricesthroughout Japan. In fact, the newspapers have rarely changed their subscriptionprices in recent years, and the three leading national dailies, together accountingfor about half the total industry circulation, and thirteen other papers accountingfor another one eighth of industry circulation, all have set exactly the same price(3,925 yen per month). The remaining local papers all set lower prices. The authorized resale price maintenance, and prohibition against prices thatvarygeographically, have allowed collusive price increases that I here estimate to bearound 500 yen per month, entailing economic waste of about 300 billion yen($3 billion) per year but adding only around 16 billion yen per year to newspaperprofit. The increased profit margin on subscriptions is much offset by reducedsale of ads.

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