Study On Suggested Retail Price,Consumer Non-national Preference And Regulation Of Resale Price Maintenance

Although China regulation authorities punished the multi-national automobile manufacturers and accessories firms of using resale price maintenance to maintain monopoly high price, the multi-national automobile manufacturers always issue the highly monopoly suggested retail price (SRP) to make the consumers to accept the high retail price again. Facing high level suggested retail price of premium automobile consumer doesn’t slow the pace to purchase, instead shows a strong desire to buy. There should be paid more research attentions for that RPM strategy set by the manufacturer facilitates high actual retail price closed to monopoly level for his product and be achieved in true transaction under the case of SRP.This paper tries to set up a market structure where two manufacturer brands are distributed by two retailers each other and construct a consumer decision function with loss-aversion effect and non-rational preference to examine the effects on industrial profit allocation and the social welfare under two pricing mechanisms:retailer retail pricing and manufacturer retail pricing. Not only that, we make further explanation for the results of model combining the price competition case of multi-national high range automobile manufacturer and take regulation suggestions for regulatory authorities for multi-national high range automobile manufacturer pricing activities including formulation of suggested retail price.The results of model show that RPM pricing mechanism can produce several advantages for manufacturer:1. the manufacturer is easier to seize the competitor’s pricing errors forming the exclusive effect;2.the manufacturer is incentive to compress excessively the profit space of downstream retailers, but doesn’t want to grab the market share by collusive pricing. Moreover, to some extent the model results explain the cause of high range automobile market competition structure in China:the multi-national automobile manufacturer early coming to China set a reasonable pricing level so that getting a effective product demand to occupy the leading position of the sales in the long term, taking advantages for other brands lately coming to China based on the understanding of local consumer non-rational preference distribution; exploring Chinese consumer preferences for better mining profits space, they are almost all choose independent pricing and to prevent downstream retailers to strengthen brand awareness.