6.15 : Public Policy and Pricing

Government-imposed public policies aim to prevent illegal pricing practices. The policies differ based on a country's economic conditions and market dynamics.

These policies address issues at two levels: within and across distribution channels.

Within channel levels, key issues include price-fixing and predatory pricing.

Price-fixing involves cooperating with competitors to set standard prices and manipulating market supply and demand.

And, Predatory pricing entails selling products or services below cost to eliminate competition.

Across channel levels, the issues include Price discrimination, which involves charging different prices to customers at a specific trade level without justifying the differences in cost or quality.

Next is retail price maintenance, where firms coerce dealers to sell their products at a specific price.

Last is deceptive pricing, which involves misleading customers by offering discounts on inflated "original" prices to enhance sale attractiveness. Or it can be advertising one price but charging another.

By addressing these issues, public policies ensure fair competition, consumer protection, and business accountability while adapting to market fluctuations.