how does price fixing work, can’t anyone charge whatever they want for a product?
In: 82
Do you see why a monopoly is bad? If a company has the monopoly on one ressource, they can charge pretty much anything they want and drop the quality of their product as much as they want. And while they might lose customers that don’t need the product, a monopoly on a product that is needed by peoples is devastating to the society. That’s why there are some anti-monopoly laws.
Laws against price fixing come from the same idea. “Price fixing” is just multiple companies agreeing to have a “monopoly” together. They agree to have the same price (for the same quality of goods), synchronising raises and discounts, so that the customers can never get a better deal elsewhere. Alternatively, they can split the market and have agreements along the lines of “You get all the customers in your big shop in city A while I put overpriced stuff in my small shop, and in exchange you overprice your stuff in your small shop in city B so that I get all the customer in my big shop. So in appearance we’re competing with each other but in reality it’s all part of a plan to make the customer think they get a discount while coming to our big shops while in reality it’s the small shops that are artificially overpriced.”.
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