Is it legal to sell the same product at different prices?
Charging different prices to different customers is generally legal. The federal Robinson-Patman Act requires sellers to treat all competing customers on the same basis, unless there is some recognized legal justification for different treatment.
What is illegal pricing?
Illegal price fixing occurs whenever two or more competitors agree to take actions that have the effect of raising, lowering or stabilizing the price of any product or service without any legitimate justification. On the contrary, they often result from normal market conditions.
What is predatory pricing and when is it illegal?
Predatory pricing is the illegal act of setting prices low in an attempt to eliminate the competition. Predatory pricing violates antitrust law, as it makes markets more vulnerable to a monopoly.
What are predatory tactics?
of, relating to, or characterized by plunder, pillage, or robbery, as in war: predatory tactics. engaging in or living by these activities: predatory bands of brigands. excessive or exploitative in amount or cost, as out of greed or to take advantage of consumers or patrons: predatory pricing.
What is predatory pricing examples?
A prime example of predatory pricing tactics between two large franchises can be seen in the prescription drug price war between Walmart and Target in Minnesota. Walmart, seeking to undercut the competition, initially began offering certain prescription drugs at well below its price floor.
How do you prove predatory pricing?
To prevail on a predatory-pricing claim, plaintiff must prove that (1) the prices were below an appropriate measure of defendant’s costs in the short term, and (2) defendant had a dangerous probability of recouping its investment in below-cost prices.
What is the aim of predatory pricing?
Predatory pricing occurs when a firm sells a good or service at a price below cost (or very cheaply) with the intention of forcing rival firms out of business. Predatory pricing could be a method to deal with new firms who enter an industry.
Why predatory pricing is bad?
It must be predatory pricing! Predatory pricing is a rather rare anticompetitive practice because the “predator” runs the risk of bankrupting itself in the process of trying to drive rivals out of business with below-cost pricing.
What is an example of price gouging?
Price gouging occurs when a seller increases the prices of goods, services or commodities to a level much higher than is considered reasonable or fair. Common examples include price increases of basic necessities after natural disasters.
Is Amazon guilty of predatory pricing?
Democrats concluded that Amazon uses a “predatory pricing strategy to increase its sales of smart home devices by pricing its products below cost.” This strategy has created “significant” barriers to entry for companies looking to compete in the voice enabled assistant market and even created challenges for fellow tech …
What is excessive pricing?
Definition. Excessive pricing is an antitrust violation that exists in most OECD countries and particularly in EU competition law where a dominant firm charges a price that is excessive relative to an appropriate competitive benchmark in a way that deems it unfair.
How is excessively high pricing generally established?
In general, the concept of “excessive pricing” has been evaluated and considered as a breach of competition law rules only in truly exceptional situations. Excessive pricing occurs when a dominant undertaking, which holds dominant market power, charges prices that are above the competitive pricing level.
What is price margin squeeze?
A margin squeeze is said to arise when the margin between the price at which the integrated firm sells the downstream product and the price at which it sells the essential input to rivals is too small to allow downstream rivals to survive or effectively compete, to the detriment of downstream consumers.
What is margin squeeze?
Market definition A margin squeeze involves situations in which a vertically integrated dominant firm hampers downstream rivals’ competitiveness in (i) raising the wholesale price of its essential input and/or (ii) reducing the retail price of the product/service.
How do you prove margin squeeze?
test’ (REO)—a margin squeeze could also be demonstrated by showing that the margin between the price charged to retail competitors for access and the price which the dominant operator charges in the retail market is insufficient to allow a reasonably efficient service provider in the retail market to obtain a normal …
What is price squeeze?
A “price squeeze,” or “margin squeeze,” is a theory of antitrust liability that concerns the pricing practices of a vertically integrated monopolist that sells its upstream bottleneck input to firms that compete with the monopolist in the production of a downstream product sold to end users.
What is a squeeze in finance?
The term “squeeze” is used to describe many financial and business situations, typically involving some sort of market pressure. In business, it is a period when borrowing is difficult or a time when profits decline due to increasing costs or decreasing revenues.
What’s the biggest short squeeze ever?
The explosive surge in stock price of GameStop Corp. (NYSE: GME), the video game retailer based out of Texas, is perhaps the biggest example of a short squeeze, as it became the rallying cry for retail investors who wanted to spoil hedge fund short-seller bets. GameStop Corp.
What is the most shorted stock right now?
Bed Bath & Beyond