What is the Full Form of RPM in the Share Market?

The RPM Full Form in the Share Market is Resale Price Maintenance. It involves the agreements between the manufacturers and the downstream distribution that set the downstream price of the product, either at a minimum or a maximum price.

Applications of RPM:

Resale price maintenance determines the price at which the distributor resells the product. Hence, RPM is known as vertical price fixing and is treated as a price-protecting method or as a practice of imposing prices. Manufacturers may set the resale prices for either or both of the retail and wholesale stages of distribution and the prices may either be minimum or fixed.

Benefits of Resale Price Maintenance:

RPM benefits resellers by eliminating competition among brands. Thus, resellers could use RPM as a means to facilitate hub and spoke conspiracy among themselves through a common supplier. RPM may also facilitate collusion among the competing suppliers by mitigating the price fluctuations in downstream trading and by increasing price transparency. It may also be used by a dominant business to close smaller rivals by enabling higher marketing for the resellers. Also, a uniform RPM policy can be of significant use in removing pro-competitive commitments from the supplier.