what are the legal constraints placed on pricing and competitive decision
Answers
The legal constraints on pricing and competitive decisions are:
*Price fixing – In this case, more than one firm is involved. Competing firms join together and decide to fix a common price for their products to avoid competition. This is illegal and such a fixing activity should not be done.
*Unfair trade practices – Wholesalers and retailers must not sell their merchandise at a price that is 2% and 6% more than the total cost of the merchandise and transportation.
*Predatory pricing and bidding – The price of a product must not be lowered to the maximum extent possible so that there is no competitor for the same in the market. Once the market has been captured this way, the price of the product should not be increased making it difficult for the consumer to continue buying the same product. In the bidding process, the bid must not made for such an amount that no competitor can afford.
*Price discrimination – A seller must not sell the same product to different customers at different rates in the same span of time.