what are the legal constraints placed on pricing and competitive decision.
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The legal and ethical constraints on pricing are following:
Unfair Trade Practices: This regulation in vogue in over half the states bars the wholesalers and retailers to sell below a floor price which is generally 2% above the combined merchandise and transportation cost for wholesalers and 6% for the retailers.
Price-fixing: It is fixing of a price between two or more competing firms that they are going to charge for a product. It results in elimination of competition in the market and is illegal under the Sherman Act and the Federal Trade Commission Act.
Resale –Price Maintenance: Resale –price maintenance occurs when a manufacturer and its distributors ensures that its retailers does not sell the manufacturer’s product below a floor price or sell it a pre-determined fix price..
Predatory Pricing and Predatory Bidding : Predatory pricing involves lowering the prices to such an extent as to make it virtually impossible for any competitor to stay in the market and once the competitors are out, prices are raised and putting the consumer at a disadvantageous position. Predatory bidding is just like predatory pricing where bid for a contract or material is bid in manner with the intent of driving out the competitors.
Price-Discrimination: This practice is prohibited under Robinson-Patman Act of 1936where a seller is discriminating by way of charging, within a reasonably short time, different prices to different customers for the same product which could be a commodity or other tangible good.
Unfair Trade Practices: This regulation in vogue in over half the states bars the wholesalers and retailers to sell below a floor price which is generally 2% above the combined merchandise and transportation cost for wholesalers and 6% for the retailers.
Price-fixing: It is fixing of a price between two or more competing firms that they are going to charge for a product. It results in elimination of competition in the market and is illegal under the Sherman Act and the Federal Trade Commission Act.
Resale –Price Maintenance: Resale –price maintenance occurs when a manufacturer and its distributors ensures that its retailers does not sell the manufacturer’s product below a floor price or sell it a pre-determined fix price..
Predatory Pricing and Predatory Bidding : Predatory pricing involves lowering the prices to such an extent as to make it virtually impossible for any competitor to stay in the market and once the competitors are out, prices are raised and putting the consumer at a disadvantageous position. Predatory bidding is just like predatory pricing where bid for a contract or material is bid in manner with the intent of driving out the competitors.
Price-Discrimination: This practice is prohibited under Robinson-Patman Act of 1936where a seller is discriminating by way of charging, within a reasonably short time, different prices to different customers for the same product which could be a commodity or other tangible good.
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