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Why do manufacturers sometimes set retail pricing, aren’t those price controls? AIUI, some products have minimum contractual prices that retailers have to sell
by edmundsauto 5y ago
Why do manufacturers sometimes set retail pricing, aren’t those price controls? AIUI, some products have minimum contractual prices that retailers have to sell for.
I’m not an economist, and I tend to see economics “laws” more akin to social science than physics. Ie, economists describe plausible mechanisms and principles, but they are not very useful to make predictions.
- jsmith99 5y agoManufacturers are not interest in maximising their social benefit: they want to maximise their profit and this is done by producing fewer items but at a higher price (to be technical, a monopoly would produce until marginal revenue = marginal cost). Manufacturers can set recommended retail prices but their are limitations to how these can be enforced.
- chii 5y ago> Why do manufacturers sometimes set retail pricing depending on how it is set - most manufacturers set a recommended price, rather than contractually obligate the retailer to sell at a particular price. It's an attempt at price-fixing (without it being price-fixing), but other manufacturers of the same goods could choose to lower their price for competition. It's not the same as price-control.