Abstract
<p>Can minimum resale price maintenance (RPM) improve consumer welfare? Theory identifies conditions under which it can, but empirical evidence is limited, and jurisdictions take divergent approaches to its legality. We study this question in the Japanese publishing industry, where RPM is permitted and may improve consumer surplus by enhancing inventory provision under demand uncertainty. We develop a model of publishers and bookstores and estimate it using detailed data on book deliveries, sales, returns, and prices. Under the observed revenue-sharing contract, we find that minimum RPM increases deliveries and supply-side welfare but lowers consumer surplus at the estimated parameters. Comparative statics show minimum RPM would benefit consumers when downstream competition is strong and demand uncertainty is moderate. These conclusions depend on the surrounding institutions: under a wholesale contract, minimum RPM would raise consumer surplus. Our findings cast doubt on whether existing enforcement approaches appropriately allocate the burdens of proving harm and offsetting efficiencies in minimum-RPM cases.</p>