Price Fixing and The United States Economy
by Price fixing does not seem to be something consumers can escape. Every time we turn around, we are faced with news of some company price fixing their products or services.
Price fixing does not seem to be something consumers can escape. Every time we turn around, we are faced with news of some company price fixing their products or services. Preventive measures were put in place. The Sherman Antitrust Act along with the Trade Practices of 1974 is their protect consumers and punish companies who practice this kind of business. The news shows that many companies do not care about the laws.
Price fixing according to Investopedia is ‘Establishing the price of a product or service, rather than allowing it to be determined naturally through free market forces. This procedure is often an illegal practice.’ (1)
In 2007 according to Mark Huffman of ConsumerAffairs.com the Supreme Court said it is alright for a manufacturer are allowed to set retail prices for consumers. (3) This allows companies such as Chrysler to set the prices of their automobiles.
In 1981, the Reagan administration began an antitrust agenda and started prosecuting a large number of companies for price fixing and it continues even now, as we watch the news. (2)
In 2009 the Big four oil companies were accused of price fixing and recently and now Apple is under the same investigation concerning ITunes which they declined the comment according to ABC News.
Cover of The Informant!
An example of price fixing is shown in the 2009 movie, “The Informant!”, starring Matt Damon as Mark Whitacre with the story of Archer Daniels Midland or ADM.
Price fixing is considered inefficient and can cause a deadweight loss in which the supply does not meet the demand of the consumer due to a price ceiling and the price the market can actually bear. It does not help the economy.
With all the loss of crude oil with the recent BP disease in the Gulf how will we know that they are not price fixing? How can we trust other corporations to look in the best interest of the people and not of themselves? If the Sherman Antitrust Act is not working shouldn’t we insist that better laws are created in the interest of the people.
(1) http://www.investopedia.com/terms/p/pricefixing.asp
(2) DeBow, Michael E., What’s Wrong with Price Fixing: Responding to the New Critics of Antitrust Cato Institute http://www.cato.org/pubs/regulation/regv12n2/reg12n2-debow.html
(3) Huffman, Mark, “Supreme Court Okays Price Fixing” ConsumerAffairs.com June 28, 2007 http://www.consumeraffairs.com/news04/2007/06/scotus_price_fixing.html
Cassandra Goduti
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