Why Price Fixing Should Remain Unlawful

1148 words - 5 pages

In today’s economy it is generally said that supply and demand determine prices on goods and services. In order for this to be true the free market cannot be interfered with. The New York Times article, “Taiwan Company Fined $500 Million for Price-Fixing,” highlights some of the issues that can arise when it comes to price fixing. In this essay I will explain what the antitrust law says regarding price-fixing agreements, and what impact these regulations have on businesses. I will give my opinion on the law, discuss the arguments for and against it, and explain why I believe unlawful price fixing has to remain illegal. I argue that without a law against price fixing the free market will not ...view middle of the document...

The United States antitrust law promotes and maintains market competition by regulating anti-competitive behavior such as price fixing. Price fixing is an agreement among competitors to charge a specified price for a particular goods or service. It also encompasses any agreement that prevents a seller from independently setting a price or establishing the quantity to be produced. Price fixing can be vertical or horizontal. Vertical price fixing pertains to agreements between a manufacturer, wholesaler, and retailer. Horizontal price fixing is a much more serious violation and involves agreements between competitors, such as two manufacturers, or two retailers.
There are many reasons why price fixing should be unlawful. Without price-fixing laws there will be less protection of the free market. In a capitalist society such as the United States, competition between companies is supposed to drive down prices of goods and services benefitting the consumers. The free market can be interfered with if companies enter into a price-fixing agreement. The involved companies can decide to reduce their output and raise their prices. In such a case, where the parties hold a majority of the market share, the consumers will not be able to obtain the same price as they would in a free market. This is exactly what AU Optronics and its competitors took advantage of. Together, holding almost 100% of the market share, they were able to inflate the prices of their LCD screens pushing a higher price on the consumers. This is especially harmful when there are no substitutes for the regarded product or service.
Another factor that supports a law against price fixing has to do with product differentiation. AU Optronic’s price-fixing agreements with its competitors made it almost impossible for newcomers to enter the market. Cases like this have a significant impact on the number of competitive products, which will be heavily reduced or even eliminated. There will be less differentiation in the product market leading to fewer options for the consumers. On the contrary, without unlawful price fixing there is more room for innovation and companies will have more incentive to diversify their product lines.
While I strongly support laws against price fixing there are several factors to consider from the opposing side. A major argument that price fixing should not be unlawful addresses the consumers’ right to make their own decisions. No company is forcing consumers to buy its products or services. Consumers have...

Other Papers Like Why Price Fixing Should Remain Unlawful

Health Care Matrix Essay

3564 words - 15 pages merger can take place. Two examples of the OFT using their powers Here the report has shown two real examples of where the OFT have been informed of illegitimate trading and have establish an investigation. A copy of each example can be found in the appendix. 1. Record fines for toys price fixing This is a good example of Argos and Littlewoods forming a cartel, along with Hasbro (the toy manufacturer). The companies were found to have

Pushing The Envelope : Engine Developement And Procurement For The F-15 Fighter Jet

381 words - 2 pages Pushing the envelope 1. Suppose this game was played for a single round only (no repetition). What outcome would you expect and why? (a complete answer includes predictions about bids, allocations, and response to crisis and uses the competitive analysis framework we learned). Suppose that Suplier1 (S1) and Supplier2 (S2) know Buyer’s value and Buyer knows S1’s and S2’s cost. S1 and S2 will submit price at 20$ because they know that Buyer’s

Macro Study

3236 words - 13 pages computers they can fix and the lines of code they can write in a day. a) Who, if anyone, has the absolute advantage? b) Who has the comparative advantage in fixing computers? Why? c) Who has the comparative advantage in writing programs? Why? 7 Item Hot dogs Pepsi Data for 2006 Quantity 4 2 Price $1.50 $1.00 Item Hot dogs Pepsi Data for 2007 Quantity 6 6 Price $1.75 $1.25 37) The table gives data on the

Antitrust Law

5520 words - 23 pages challenged conduct occurred, and that it is rightly characterized as a recognized per se offense. The per se offenses include horizontal price-fixing (but not resale price maintenance), bid-rigging, horizontal market allocation, and certain kinds of group boycotts (coordinated refusals-to-deal by which the targeted companies cannot obtain supplies or access that they require in order to remain viable competitors in specified lines of commerce). Other

Government Intervention In The Market. (Specifically The Australian Market.)

1263 words - 6 pages other word related entitlements.To implement a floor price, the government must first decide on whether or not a floor price should be used, what the floor price should be, how they will deal with the side effects, over what period of time it is to be introduced and if the benefits outweigh the consequences. When used floor prices can cause significant side effects in the economy, because of this it is imperative for the government to carefully

Advertising Techniques

2225 words - 9 pages posted on their Facebook page. As an open, two-way forum, there is an expectation that page moderators will only remove comments where necessary; for example offensive, unlawful or clearly untrue material. To protect themselves, businesses that use social media should display their moderation policy prominently so that consumers have a clear understanding of when and why content will be moderated, whether that be through editing or by removing

Organ Transplantation

5921 words - 24 pages as if he had killed all mankind and whosoever saves the life of one it shall be as if he had saved the life of all mankind." (5:32) The Council is of the opinion that human organs should be donated, and not sold. It is prohibited to receive a price for an organ. Is organ donation permissible? Answered by Mufti Muhammad ibn Adam, Darul Iftaa (Leicester, UK) In the name of Allah, Most Compassionate, Most Merciful, The issue of organ

White Collar Crimes and Price Fixing

1640 words - 7 pages White Collar Crime: Embezzlement and Price Fixing Dr. Stokes White Collar Crime Fall 2012 November 19th 2012 This paper will discuss White Collar crime and the crime of price fixing, antitrust, and embezzlement. There are many different types of white collar crime. White Collar crime is a crime that is not too often viewed as harmful. A White Collar crime is an illegal act committed for monetary gain. The Federal Bureau of Investigation

Est1 Task 1

4083 words - 17 pages laws or regulations in an effort to help address potential fraudulent activities in the securities industry. Edward Jones is committed to compliance with laws, rules and regulations that govern our business and expects associates to report potential unlawful and/or inappropriate conduct to the firm. Policy Associates should contact Compliance Service or Associate Relations to report concerns or information regarding potential unethical

Persuasive Essay Final Paper

1117 words - 5 pages car takes a long process (p.129). (Bevan 2008. p.53) explains that home owner take added care to their homes than renters, they remain in their homes longer than those who have rented homes. He reports that research shows home owners to report a high self-esteem than renters. Other than psychological comfort owning a home can be an option of tapping into house equity when emergencies arise. All the advantages of ownership can be lost once the

Terrorism in Pakistan

1659 words - 7 pages , accountability, and logisticsrequired. F.Conflicts of personality, human psychology and ego problems. G.Conflict over expenditure and its deviations.Most of the conflicts can be resolved by following the principles listed here: 1. People  Separate people from the problem. It implies that the views of all concerned should be obtained. Thequestions such as what, why, and when the error was committed is more important than to know whocommitted it

Related Essays

Why Marijuana Should Remain Illegal Essay

968 words - 4 pages Why Marijuana Should Remain Illegal People can debate over this issue for minutes, hours, even days, but they never get anywhere with sway the government to change the laws on marijuana. This had been an issue amongst the nation for decades. Many believe that it should be legalized again, like it was back in the old days, but with government regulations. While others believe it is just immoral and should be illegal and violators should be

Bus 670 Week 6 Assignment

3141 words - 13 pages the business in that area and the two owners want to keep the price moving up and not down for profit. They are not allowed together and determine on prices and market prices that they want to keep the gas prices at. Price fixing was split into two different types of price fixing, vertical and horizontal. Vertical price fixing includes a buyer and a seller agreeing on what price the products should be resold, while horizontal takes two or more

Identify And Explain The Key Features Of An Oligopolistic Industry. Illustrate Your Answer With Reference To An Industry Of Your Choice

996 words - 4 pages describes why the UK detergent industry which is dominated by a few firms reflects the model of an oligopoly. Several real life examples have been used to confirm the theory of oligopoly. Moreover, the price rigidity observed in an oligopolistic industry has been explained by the kind demand curve theory. The second section of the report examines the case of price fixing by Procter & Gamble, Unilever and Henkel, who are major players in the detergent

Micro Study Essay

1068 words - 5 pages level. This is an example of: Price Fixing 29. An apple orchard currently hires 10 workers. The owner estimates that hiring an additional worker would increase apple yields by 20 bushels per day. The price of apples is $15 per bushel. The owner should hire the extra worker if the wage rate is no greater than: $300 per day 30. If official U.S. poverty statistics included in-kind transfer payments the: poverty rate would be lower 31. The