Why is Price Fixing Harmful?
How pricing fixing hurts customers
Written by J. Mance Gordon
Updated at April 17th, 2024
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
-
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
- Courses
Why is Price Fixing Harmful?
Price fixing, as as discussed in our article What is Price Fixing?, is collusion between sellers to maintain a certain price level to increase profits and to limit competition. in the meantime. So why is this a bad thing?
First, it means that the market interference. In other words, the normal rules of supply and demand are not going to be at work. The price is set artificially, which will determine what we as buyers have to pay. Even if we don't want to pay that price, if we need the product we'll have to pay that price.
Price fixing can deprive buyers of fair options. We can be stuck paying a high price that we otherwise wouldn't if we had a choice for lower-priced options.
Lastly, price fixing is illegal. Generally, it is prohibited under Antitrust law. As such, it is something that we need to avoid as a business or as marketers
Related Topics
- What is the Right Price for a Product?
- Competition-Driven Pricing
- Profit-Oriented Pricing Strategy
- Sales-Oriented Pricing Strategy
- Status Quo Pricing Strategy
- Value-Based Pricing Strategy
- Penetration Pricing Strategy
- Manufacturers Suggested Retail Price (MSRP) Definition
- Markdown
- Price Skimming
- Why Give Discounts?
- Trade Allowances
- Charging for Product Transportation
- Legal Issues with Pricing
- What is Product Dumping?
- What is Price Fixing?
- Why is Price Fixing Harmful?
- What is Price Discrimination?
- Why Pricing Discrimination is Harmful