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In neo-classical economics, price fixing is inefficient. The anti-competitive agreement by producers to fix prices above the market price transfers some of the consumer surplus to those producers and also results in a deadweight loss. International price fixing by private entities can be prosecuted under the antitrust laws of many countries.
Anti-competitive behavior can be grouped into two classifications. Horizontal restraints regard anti-competitive behavior that involves competitors at the same level of the supply chain. These practices include mergers, cartels, collusions, price-fixing, price discrimination and predatory pricing.
Predatory pricing is a commercial pricing strategy which involves the use of large scale undercutting to eliminate competition. This is where an industry dominant firm with sizable market power will deliberately reduce the prices of a product or service to loss-making levels to attract all consumers and create a monopoly. [1]
Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. [ 1 ] [ 2 ] Competition law is implemented through public and private enforcement. [ 3 ]
Most jurisdictions consider it anti-competitive behavior and have outlawed such practices. Cartel behavior includes price fixing, bid rigging, and reductions in output. The doctrine in economics that analyzes cartels is cartel theory. Cartels are distinguished from other forms of collusion or anti-competitive organization such as corporate ...
Co-sponsored by Senator Joseph T. Robinson (D-AR) and Representative Wright Patman (D-TX), it was designed to protect small retail shops against competition from chain stores by fixing a minimum price for retail products. Specifically, the law prevents suppliers, wholesalers, or manufacturers from supplying goods to "preferred customers" at a ...
The National Association of Realtors announced a $418 million settlement to end several lawsuits accusing the influential organization of unfair practices in home buying.
Because competition among sellers can provide consumers with low prices, conspiracy agreements increase the price consumers pay for the goods. Because of this harm to consumers, it is against antitrust laws to fix prices by agreement between producers, so participants must keep it a secret.