Companies must consider laws governing fair pricing practices when setting prices. These laws address issues like price fixing, predatory pricing, and unfair discrimination within and across distribution channels. Price fixing involves competitors agreeing on prices, while predatory pricing undercuts rivals. Unfair discrimination occurs when sellers charge different prices to similar customers. Laws also regulate requiring retail prices and deceptive advertising of price savings.

1. HammadRasheedID : 11

2. Public Policy and Pricing

3. Public Policy and PricingPrice competition is a core element of our free- market economy.In setting prices, companies are not usually free to charge whatever prices they wish.

4. How Pricing Is Controlled?Many federal, state, and even local laws govern the rules of fair play in pricing. In addition, companies must consider broader societal pricing concerns.

5. Issues in PricingPricing IssuesWithin ChannelAcross ChannelPricing Fixing

6. Predatory Pricing

7. Unfair Price Discrimination

8. Retail Price Maintenance

9. Deceptive PricingIssues in PricingProducer ARetailer ARetail PriceMaintenanceDeceptive PricingPrice-FixingPredatory PricingPrice-FixingPredatory PricingConsumerDiscriminatory PricingProducer BRetailer BUnfair Pricing Within and Across Channel Levels

10. PRICING WITHIN CHANNEL LEVELS1. PRICE FIXINGAn agreement between business competitors to sell the same product or service at the same price.

11. Why Sellers Fix Prices?In oligopolistic industries, price competition among firms tends to drive prices down and to reduce profits.

12. One alternative is to collude and set prices at or near monopoly level---thus increase total profits to be shared. PRICING WITHIN CHANNEL LEVELS2. PREDATORY PRICINGThis is to sell below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business.

13. The biggest problem is determining just what constitutes predatory pricing behavior. Selling below cost to sell off excess inventory is not considered predatory; selling below cost to drive out competitors is. Thus the intent can be very difficult to determine or prove.Predatory Pricing-- A trick for seller

14. PRICING ACROSS CHANNEL LEVELSUNFAIR PRICE DISCRIMINATION: In this, sellers offer different price terms to customers from a given manufacturer.

15. Price Discrimination Allowed? Yes, the seller can discriminate in its pricing if the seller manufactures different qualities of the same product for different retailers. The seller has to prove that these differences are proportional.

16. PRICING ACROSS CHANNEL LEVELS2. RETAIL PRICE MAINTENANCE In this, a manufacturer requires dealers to charge a specified retail price for its product. Although the seller can propose a manufacturer’s suggested retail price to dealers, it cannot refuse to sell to a dealer who takes independent pricing action.

17. PRICING ACROSS CHANNEL LEVELS3. DECEPTIVE PRICINGThis occurs when a seller states prices or price savings that mislead consumers or are not actually available to consumers.

18. ANY QUESTION?