|Appears in Collections:||Marketing and Retail Journal Articles|
|Peer Review Status:||Refereed|
|Title:||Below-cost legislation: lessons from the Republic of Ireland|
below cost legislation
Grocery trade Ireland
Retail trade Ireland
|Citation:||Collins A & Burt S (2011) Below-cost legislation: lessons from the Republic of Ireland. International Review of Retail, Distribution and Consumer Research, 21 (1), pp. 33-49. http://www.tandf.co.uk/journals/titles/09593969.asp; https://doi.org/10.1080/09593969.2011.537818|
|Abstract:||This paper traces the emergence, evolution, and demise of below cost legislation in the grocery industry in the republic of Ireland. The paper adds to our understanding of the legislation by adopting the view that, by using the net invoice price as its definition of cost, the legislation increased two streams of quasi-rents, first on suppliers’ brandeds and second on retailers’ own brands which acted to depress competitive forces and direct supplier-buyer negotiations to off-invoice discounts. Supplier generated quasi-rents financed discounts, and when coupled with retailers’ higher margins on their own brands, provided little incentive for a return to a price competitive environment. Two factors undermined this situation: the substitution of discounters’ products for suppliers’ brands as the discounters share of the market grew and the increase in cross border shopping. These had the combined effect of reducing the available quasi-rents earned in the Irish market resulting in the breakdown of the status quo and a return to price competition. Through its impact on negotiations, the legislation also introduced inefficiencies to both retailers’ and suppliers businesses representing additional waste that could have been more productively used to reduce consumer prices. The paper endorses the Government’s decision to rescind the order and remove an important constraint on both vertical and horizontal competition. Lessons from the Republic of Ireland suggest that the competitive response to the removal of below cost legislation, and reductions in prices, may take time and will depend on economic circumstances and a change in the prevailing norms of organizational behaviour and quasi-rent seeking opportunities|
|Rights:||Published in The International Review of Retail, Distribution and Consumer Research by Taylor & Francis (Routledge).; This is an electronic version of an article published in The International Review of Retail, Distribution and Consumer Research, Volume 21, Issue 1, February 2011, pp. 33 - 49. The International Review of Retail, Distribution and Consumer Research is available online at: http://www.informaworld.com/openurl?genre=article&issn=0959-3969&volume=21&issue=1&spage=33|
|Intrevbelowcostlegislationrevised.pdf||Fulltext - Accepted Version||236.88 kB||Adobe PDF||View/Open|
This item is protected by original copyright
Items in the Repository are protected by copyright, with all rights reserved, unless otherwise indicated.
The metadata of the records in the Repository are available under the CC0 public domain dedication: No Rights Reserved https://creativecommons.org/publicdomain/zero/1.0/
If you believe that any material held in STORRE infringes copyright, please contact firstname.lastname@example.org providing details and we will remove the Work from public display in STORRE and investigate your claim.