Case Saihan

Saihan system is a protectionist system of price maintenance that introduces laws that allowed publishers to set fixed prices of their products to encourage perfect competition and avoid monopoly. Book retailers in Japan are price takers; they are not allowed to set their preferable prices. There are benefits of the systems for individual companies and the industry to participate in Saihan system. Saihan system protects smaller book retailers against larger companies from being forced out of the market by making discounting illegal. Moreover, the Saihan system promotes perfect competition, thus the entry barrier for new entrants is low. It is argued that the system has increased the number of publishers and booksellers. The establishment of the Consignment Resale System gives the ability of retailers to return unsold books free of charge, which also fosters booksellers to give shelf space to new titles or books of less known authors. However, there are also costs to the industry and individual companies. Competition between companies within the industry is minimised to the lowest level by Saihan system. Hence, there is little room for differentiation in the industry.?

Saihan system is a protectionist system of price maintenance that introduces laws that allowed publishers to set fixed prices of their products to encourage perfect competition and avoid monopoly. Book retailers in Japan are price takers; they are not allowed to set their preferable prices. There are benefits of the systems for individual companies and the industry to participate in Saihan system. Saihan system protects smaller book retailers against larger companies from being forced out of the market by making discounting illegal. Moreover, the Saihan system promotes perfect competition, thus the entry barrier for new entrants is low. It is argued that the system has increased the number of publishers and booksellers. The establishment of the Consignment Resale System gives the ability of retailers to return unsold books free of charge, which also fosters booksellers to give shelf space to new titles or books of less known authors.