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12 Va. L. & Bus. Rev. 1 (2017-2018)

handle is hein.journals/valbr12 and id is 1 raw text is: VIRGINIA LAW & BUSINESS REVIEW VOLUME 12 FALL 2017 NUMBER 1 A CONSUMER BEHAVIORAL APPROACH TO RESALE PRICE MAINTENANCE Thomas K. Chengt ABSTRACT This Article reexamines the various pro-competitive justifications and theories of harm for resale price maintenance (RPM'), one of the most controversial practices in antitrust law. It argues that the existing lterature overlooks three important issues regarding RPM, namely, the kind of retail serice invoked in a justification, the kind of retailer at issue, and the prevaing model of consumer behavior. All three issues have important implcations for the plausibity and valdity of the various justifications and theories of harm for RPM. It argues that most of the existing lterature presumes the inter-brand primacy model of consumer behavior. Once this model is not applcable, much of the prevaing analysis breaks down and the legaity of RPM needs to be reconsidered. In particular, this Article demonstrates that many of the accepted justfiications for RPM are of doubtful valdity or are only vald under lmited circumstances. This lends support to a more hostile biew of RPM. I. INTRODUCTION ......................................... ..............3 II. SOME PRELIMINARY ISSUES ...........................................5 A. The Economic Rationale for RPM..........................5 B. Single-Brand vs. Multibrand Retailers ........ ...............10 C. A Taxonomy of Retail Services. .................. ..........11 Associate Professor, Faculty of Law, University of Hong Kong; thomas.cheng@hku.hk. The Author would like to thankJoshua Kanjanapas, Karen Tsan& Stephanie Chen, Holly Lau, Harry Chan, and Max Chan for their able research assistance. Copyright C 2017 Virginia Law & Business Review Association 1