ADVERTISING AS SPECIAL SERVICE PROVISION UNDER NONPRICE VERTICAL RESTRAINTS - EXCLUSIVE TERRITORIES IN BEER DISTRIBUTION

This article presents statistical evidence which supports Lester Telse r's 1960 hypothesis, that when vertical restraints are made illegal, i ntrabrand competition results which diminishes the provision of point- of-sale, special services. This results because of the public goods pr oblem exhibited by the special services. Increased special service pro vision by the national manufacturer must then substitute for the speci al service provision left unfilled by the wholesaler. Evidence relatin g to the efficacy of such substitution is also presented.