In this paper, we try to explain the ambiguous impact of the Raffarin law on the
relationships between manufacturers and retailers. We show that the law has two
conflicting effects on the share of profit between upstream and downstream firms.
We study the influence of a capacity constraint on the development of own brands
by retailers. We show that, when entry is free at the retailers’ level, a restriction of
the retailers’ capacity, as imposed by the Raffarin law, can improve producers’
profit. But barriers to entry on the downstream market remove this effect.
Classification JEL: K21, L13, L42