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There was a tide in the affairs of men that was taken at its flood by the National Association of Retail Druggists--and it led on to fortune. For this band of little men the Miller-Tydings Amendment to the Sherman Act I was the end of a thirty years war. Enjoined in 1907 from attempting to force up retail price margins and maintain retail drug prices at a uniform level, this association joined with other groups desirous of achieving similar ends in an effort, year after year, to persuade Congress to permit the making of contracts between manufacturers and retailers that would fix minimum resale prices. With the beginning of the depression in the thirties, the Association shifted its efforts to the states, where the first success in retail price control came with the passage of the California Fair Trade Act in 1931. In the ten succeeding years 45 states passed resale price maintenance laws --the so-called Fair Trade Acts and the Federal Government bestowed its blessing on such laws when the contracts they legitimated concerned goods in the course of commerce.

Resale price maintenance raises not only economic problems but also legal ones. Indeed, much of the material on the subject is legal in origin. These legal aspects are, of course, important in showing the nature of the arguments—economic and other—involved, but their importance is mainly with respect to the technique of maintaining the system. For the immediate purpose one can assume that the economic aspects of resale price maintenance are the same, irrespective of the actual technique of enforcement and therefore the legal aspects, as such, can be ignored here.It may be pointed out, however, that the methods used to enforce compliance with the system are various. In Great Britain, for example, the trade association with contracts for its members and dealers is common. These may be enforced by legal action or economic action such as refusal to sell. In other cases it may be handled by contracts between the manufacturer and the jobber and then jobber and dealer. The actual technique used is usually dependent upon what the law permits; accordingly it varies from jurisdiction to jurisdiction. Of course, the effectiveness of the scheme depends upon enforcement. Paradoxically enough, the better the system is maintained, the greater are the gains to any one dealer in evading it. Thus success tempts the very forces which if not checked will break it.

This, one of the extremely limited number of full-length studies devoted exclusively to resale price maintenance in Great Britain, is a doctoral thesis submitted to the University of Amsterdam. The author, apparently trained in economics at British universities, also claims a "connection with the trade in branded consumer goods" lasting "for a number of years." In his introduction, Dr. Kuipers expresses particular dissatisfaction with the theoretical analyses advanced by British economists, which, he claims, are inadequately supported by "facts." His own analysis he believes to be sufficiently comprehensive to enable him to derive a formula, "the adoption of which … would provide an adequate solution to the problem [of resale price maintenance] in Great Britain under present conditions" (p. 3). The degree to which other economists will recognize this ambitious claim will depend on whether they accept Kuipers' analysis of what "the problem" of resale price maintenance is and, for those who do, whether they also believe that his particular scheme is desirable and administratively feasible.The volume is divided into two parts: the first deals in a general way with the legal and economic aspects of resale price maintenance in Great Britain and lays the basis for Dr. Kuipers' policy recommendations; the second part deals with the nature and extent of price maintenance in the British grocery trade. Although more than one hundred pages are devoted to the latter section, the empirical data upon which the statistical analysis is based are very sketchy. Dr. Kuipers is not unaware of this weakness but he considers the results "generally accurate" and "sufficiently near the mark." Whether or not one agrees with this assessment, there can be little question that Dr. Kuipers has achieved as much as an individual investigator, working unassisted, could hope to do.

The article revisits the conventional wisdom according to which vertical restrictions on retail prices help upstream firms to collude. We analyze the scope for collusion with and without resale price maintenance (RPM) when retailers observe local shocks on demand or retail costs. In the absence of RPM, retail prices react to retailers' information, and deviations from collusive behavior are thus difficult to detect. By eliminating retail price flexibility, RPM facilitates the detection of deviations but reduces profits and thus increases the short‐run gains from a deviation. Overall, RPM can facilitate collusion and reduce total welfare when firms adopt it.

"An upstream manufacturer can use minimum retail price maintenance (RPM) to exclude potential competitors. RPM lets the incumbent manufacturer transfer profits to retailers. If entry is accommodated, upstream competition leads to fierce down- stream competition and the breakdown of RPM. Hence, via RPM, retailers internalize the effect of accommodating entry on the incumbent's profits. Retailers may prefer not to accommodate entry; and, if entry requires downstream accommodation, entry can be deterred. We investigate when an incumbent would prefer to exclude, rather than collude with, the entrant and the effect of a retailer cartel. We also consider the effect of imperfect competition. Empirical and policy implications are discussed"--National Bureau of Economic Research web site