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Can you explain the distinction between horizontal price fixing and vertical price fixing with an example?
by tunesmith 13y ago
Can you explain the distinction between horizontal price fixing and vertical price fixing with an example?
- dragonwriter 13y agoHorizontal price fixing is when competitors in a market (like, say, the major book publishers) cooperate to control prices in that market. Vertical price fixing is an entity at one level of the chain of production controlling prices at another level (typically, its a manufacturer dictating retail prices.)
- DannyBee 13y agodragonwriter's explanation is a good one. Vertical price fixing is also rarely naked "price fixing" (IE directing a price to sell something at), it's usually resale price maintenance: Two fake (I think!) examples: Microsoft tells amazon they can't sell the xbox 360 for less than 399.99 (minimum resale price maintenance) Microsoft tells amazon they can't sell the xbox 360 for more than 299.99 (maximum resale price maintenance) Horizontal, on the other hand would look like this: Microsoft and Sony agree that they will not let anyone sell the xbox360 or playstation 3 for less/more than 399.99. Your local gas stations get together and agree they won't undercut each other's prices anymore. (IE they've made a horizontal agreement not to compete on price)