Illustrative Example
An airport has five independent retailers that sell water. Each sells the same brand of water at the same price, $7. The average price of the same brand of water outside the airport is $2. Regulators may begin to suspect that some form of collusion has taken place between the sellers. According to competition theory, the price should fall because the first store to drop the price will likely receive a large share of the customers.Impact
Price fixing is an economic inefficiency that is considered anti-competitive behavior.| Overview: Price Fixing | ||
Type | Price EconomicsBusiness LawCompliance | |
Definition | An agreement between competitors that boosts prices. | |
Mechanisms | Price floorFixed priceSupply capMandatory surcharges | |
Related Concepts | ||
