Barak Orbach

The Image Theory: RPM and the Allure of High Prices

A century of debates over resale price maintenance (RPM) has generated hundreds of articles that develop a handful of theories. This article introduces a new theory—the “image theory,” which builds on one of the oldest—yet neglected—explanations that manufacturers offer for RPM: uniform retail prices for a branded good maintains the products exclusive image, thereby luring consumers and increasing revenues.