Salience in Retailing: Vertical Restraints on Internet Sales

We provide an explanation for a brand manufacturer's rationale to prohibit retailers to distribute its products over the internet, based on the assumption that a consumer's purchasing decision is distorted by salient thinking. We find that banning online distribution of the branded good aligns retailers’ incentives with the manufacturer's interest to make quality the salient product attribute and allows it to charge a higher wholesale price than under free distribution.