Effects of SBWP Jump-Dealing on China’s Book Market from the Perspectives of Competition and Antimonopoly

Yu Li , Xu Honghai and Feng Bo
Center for Economic Analysis of Law and Policy Evaluation, Tianjin University of Finance and Economics, Tianjin, China

Abstract:  With the rise of the Internet and E-commence, it has become common for consumers in the book, clothing, electronic appliances, furniture and cosmetic industries to engage in a phenomenon termed “store-browsing-web-purchasing” (SBWP). These are customers who tend to acquire service and information about particular products at traditional (brick and motar) retail stores but purchase them online at a lower price. This creates new issues and new perspectives to the science of law and economics. This paper addresses the issue of SBWP based on the industrial organization theory (especially the vertical dual-pricing system). It then endeavors to demonstrate the three “jump-dealing” theorems of SBWP from analyzing the business models, consumer purchasing patterns and price differences in distributing channels. Furthermore, we extrapolate the theory of jump-dealing and resale price maintenance (RPM) offsetting based on previous findings. The main conclusions are the following: if a company’s RPM strategies substantially eliminate competition, then jump-dealing behavior from consumers should be encouraged. Conversely, if this jump-dealing behavior from consumers brings about anti-competition and free riding problems, then a company’s RPM strategies should be exempted.
Keywords: store-browsing-web-purchasing (SBWP), jump-dealing, price difference in distributing channels, free-rider, resale price maintenance (RPM)

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