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A single company setting a price for its own product, for which viable alternatives exist in the same category at different price points, is a very different an
by jeremymcanally 7y ago
A single company setting a price for its own product, for which viable alternatives exist in the same category at different price points, is a very different animal than a group of suppliers using their monopoly status on a product category to inflate prices for their own profit.
- AnthonyMouse 7y agoExcept that it's exactly what allows that to happen. If MegaCorp says they sell widgets wholesale for $7 and you must sell them retail for $10, everybody sells them retail for $10 and makes $3. Meanwhile BigCorp does the same thing for for the widgets they make and all the widgets retail for $10. Nobody can lower their prices except the manufacturers who are few enough to be secretly colluding, so no price competition commences. Without this, BoxCo starts buying widgets for $7 and retailing them for $9. Which, immediately, is a lower price for the consumer. Then another shop without BoxCo's scale starts pressuring MegaCorp to give them widgets for $6.50 instead of $7 so they can compete with BoxCo's $9, which the manufacturer wants because they don't want BoxCo to have a retail monopoly on their goods. So now more retailers are selling for $9 retail to the benefit of the customer. Then BigCorp has to lower their wholesale prices so their retailers can compete with MegaCorp retailers selling for $9, and so on. Price fixing is enabled by fixing prices. Or to put it another way, enforced MSRP is a conspiracy to fix prices on the part of the retailers coordinated through the manufacturer.