Moneyzine
Contents
/Careers Guides/Price Fixing

Price Fixing

Moneyzine Editor
Author: 
Moneyzine Editor
2 mins
September 26th, 2023
Advertiser Disclosure

Definition

The term price fixing is used to describe an agreement between buyers or sellers that dictates the price of a product or service, rather than allowing the forces of supply and demand to establish the price.

Price fixing is illegal in many countries, and may also be considered a criminal offense in the United States under antitrust laws.

Explanation

Price fixing is oftentimes used by buyers or sellers to inflate the price of a product or service so that extraordinary profits are gained; however, such agreements can also be used to lower or help stabilize prices. Governments of countries will sometimes engage in price fixing of exports through subsidies.

Price fixing can also be practiced by both buyers and sellers. For example, retailers (buyers) may agree to purchase a product at an artificially low price from a manufacturer, while sellers can group together to inflate the price of a product. Generally, price fixing can be subdivided into two categories:

  • Vertical Price Fixing: includes instances where manufacturers attempt to control the price of a product at retail.

  • Horizontal Price Fixing: includes agreements between retail competitors to establish and charge consumers a specific price for a product.

Note: In some markets, horizontal price fixing is allowed and is referred to as retail price maintenance. For example, a manufacturer of luggage may not allow approved retailers to discount their items.

In addition to price fixing, anti-competitive practices may include bid rigging, boycotts, disparagement, dividing territories, dumping, exclusive dealing, tying, as well as the unethical collection of business intelligence.

Anti-competitive laws in the United States were passed to promote fair competition for the benefit of consumers. This includes a collection of both federal and state laws that are an extension of antitrust laws such as the Sherman Antitrust Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914.

Related Terms

Related Content

Is It Worth Pursuing a Master's Degree?
In an era where education is synonymous with opportunity, many consider pursuing a Master's degree a surefire way to advance their careers. However, is it really the golden ticket to success we've been led to believe?
March 21st, 2024
The gender pay gap, the persistent disparity in average earnings between men and women throughout their careers, serves as a critical measure of wage inequality. This gap underscores the ongoing issue of income disparity, despite the ideal of equal pay for equal work.
March 14th, 2024
7 Essential Financial Moves After Losing Your Job
Navigating the stormy seas of job loss? You're not alone.
February 23rd, 2024
The Most In-Demand Skills to Get Hired in 2024
Every job requires a combination of vital skills, but what skillset is valued most in 2024? As the job market evolves, staying ahead means it’s key to understand and acquire the skills that employers value most.
February 20th, 2024
Key Productivity in the Workplace Statistics for 2024
In 2023, global employee engagement saw a slight uptick, with 23% of employees engaged, up by two percentage points. However, a sizable 59% are categorized as disengaged, while actively disengaged employees, known as "loud quitting," declined to 18%. These figures highlight the persistent challenge for organizations to cultivate happiness and productivity in the workplace.
January 31st, 2024

Contributors

Moneyzine 2024. All Rights Reserved.