PRICE FIXING Meaning and
Definition
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Price fixing refers to a collusive practice where competitors in an industry, typically sellers or producers, conspire to establish and maintain a set price or price range for their products or services, thereby eliminating competition and manipulating the market. This anticompetitive behavior is often considered illegal under various antitrust laws.
Typically occurring within oligopolistic markets where a limited number of dominant players operate, price fixing can take various forms. One common method is horizontal price fixing, where competitors agree to set uniform prices, ensuring that none of them undercut each other. This eliminates the competitive advantage of lower prices and prevents potential new entrants from gaining a foothold. Another form is vertical price fixing, where manufacturers or suppliers conspire with resellers to set minimum resale prices, restricting price competition at the retail level.
Price fixing stifles competition, restricts consumer choice, and artificially inflates prices. It can have severe negative consequences on market dynamics, leading to reduced innovation, quality, and efficiency. By circumventing the forces of supply and demand, price fixing disrupts the normal functioning of the market, leading to inefficiencies and potential welfare losses.
Due to its detrimental impact on the economy, most countries have enacted legislation prohibiting price fixing, with severe financial penalties and legal consequences for those found guilty. International agreements such as the Sherman Act in the United States and Article 101 of the Treaty on the Functioning of the European Union address the issue, aiming to protect fair competition and promote consumer welfare.
Common Misspellings for PRICE FIXING
- price-ficxing
- price-fixsing
- price-fixin
- pricee-fixing
- price-fixxing
- pricefixinng
- price ficint
- price fixating
- priace fixing
- prixc fixing
- price fiksing
Etymology of PRICE FIXING
The term "price fixing" can be broken down into two parts: "price" and "fixing".
The term "price" comes from the Middle English word "pris", which means "value", "reward", or "prize". It derives from the Old French word "pris" and the Latin word "pretium", both of which also mean "price" or "value".
The term "fixing" comes from the Old English word "fixian", which means "to fasten", "make firm", or "establish". It has the same origin as the word "fix".
When combined, "price fixing" refers to the act of setting or establishing prices artificially, usually through collusion or conspiracy between competing businesses, rather than being determined by market forces.
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