| This dissertation studies the governance of the online channel via Minimum Advertised Pricing (MAP) policies and demonstrates that MAP is not merely a solution to a pricing problem, but is a part of a broader channel management problem. An online channel provides manufacturers with opportunities for broad distribution and improved provision of information about sellers, buyers, and other players in the market. However, this broad distribution also brings a new set of challenges, as manufacturers aim to protect their brand image and pricing and assume control over the distribution channel system. One solution that is widely used by manufacturers is a MAP policy, which allows manufacturers to unilaterally impose a lower bound on advertised prices and protect retail margins. However, compliance and enforcement are central since retailers often violate these policies and because the channel may include unauthorized retailers for which the policies do not apply.;The first chapter, "Minimum Advertised Pricing: Patterns of Violation in Competitive Retail Markets" (with Eric Anderson and Anne Coughlan), studies the nature of MAP compliance in an online channel of a durable goods manufacturer. We document how MAP violations vary by retailer, product, and market characteristics, and link our results to manufacturers' common wisdom and extant academic literature on agency theory and price obfuscation. The second chapter, "Channel Management and MAP: Evidence from a Natural Experiment", studies a manufacturer's ability to influence compliance rates among its authorized retailers. I exploit a natural experiment prompted by a change in channel policies. I find improvement in MAP compliance in the authorized retailer channel, which I attribute to customization of channel agreements and policies to the online retail environment and improvements in the credibility of both monitoring and enforcement. In the third chapter "Price Reaction and Competition in Durable Goods Markets: Evidence from Promotional MAP periods", I investigate how variation in the imposed MAP price affects pricing in the channel, by studying how retailers react when MAP policies are temporarily removed. |
