Why is price fixing bad? Or is it?

Thinking of “Price fixing” is a fix price calculated for producing merchandise based on

the material cost and labor cost combined to evaluate the value of a product for estimating profit

to be included in the sale price of a product to sell, but this is not the general understanding for

price fixing. Another term for price fixing is price control, the essay will show who control price

and why is bad.

Price fixing is a business for marketing. However, is there a guarantee or assurance that a

product will sell when market is about inflation and deflation because of competition and

monetary system. Therefore, is there a right price for fix product, the answer to that is yes for

cost of material and labor, but who benefitted from selling the product. Price fixing is business

control by the government for setting maximum and minimum price.

Although, some agree that business for price fixing is “understandable. Even though they

fail to protect many consumers and hurts others . . . hold out the promise of protecting group,”

stated Hugh Rockoff in the Library of Economics and Liberty.

A fix product is standardized or uniform material that we know what madeof for

generating cost is. For example, is making of the Silverspoon; we know the spoon is made of

silver to assign the price of silver with labor for shaping the silver into a spoon to assigned

generic cost for the made product. That is, the value of silver plus labor equal cost, but was the

cost effective for selling the product, the answer is no for number one, that price fixing is bad.

Second, for monetary system price fixing is control by the government. Price control is an

establishment for maximum price levels for basic goods and services according to the

government. Therefore, for Silverspoon the sale price is generic cost for the material, another

reason why price fixing is bad.

In order for product to sell, the product has to appeal to the buyer require another cost to a

product such, labeling product, wrapping, advertising, and displaying product for buyer to see,

all these for a fix price. How could that generate a profit is another reason why price fixing is

bad.

Other means for selling a product is transporting the product to a location, where there is

a buyer. For example, is shipping the Silverspoon to a grocery store. On the other hand, the

product need to sell, all these efforts and expenses associated with selling the product is not

included in the price for making the product is another reason why price fixing is bad. Then, the

question is who make money, who profit from making and selling the product? Definitely, the

seller did not make money or the producer because the produce only get pay for the cost of the

material and service. The person that makes money is the person who controls the price, in this

case, the government, another good reason why price fixing is bad because the system for

monetary by the government were base on inflation and deflation that contradicts the notion free

market. In a free market, the maker is the seller that set the price for his or her product based on

demand.

How does inflation and deflation affect price fixing? Inflation is the government

mechanism for justifying increasing price such as, increase the price of beef to $2 per pound in

the grocery store. While deflation is the opposite, that use for reducing price because of surplus.

One thing about price fixing is that it is a structure for the economic control by the government,

according to F. M. Scherer & David Ross (1990) referencing in their abstract, “price fixing

related to restraints structural monopolies” in a monetary system for “regulation and price

discrimination”. In addition, “are examined, as the complex policies governing pricing

relationships between vertically linked firms . . . the role of advertising and the roles of market

structure”. This also is another reason why price fixing is bad because of shift in the element for

making a product such as, if there is more silver, the price for Silverspoon is devalue, reduce, or

go down.

The worst of price fixing is loosing your home whether there is inflation or deflation,

take inflation for example, increase in the price of antique home because of modernization and

because there is few left of antique home. The buyer pay more for antique house to upgrade the

house for modernization such as , pay more for a house built in the 1950’s, to meet the standard

for lead free home for 1990. This is the idea of price fixing that is bad. Why a house that needs

upgrade cost more just because the house is no longer in surplus? How is that fair when you pay

more for reduction of product for upgrade, it sound like double dealing for government to make

profit. Likewise, deflation, because there is more, which cost more money to make or produce

reducing the price because surplus. Price fixing is bad because is the way government control

people to make more product for less money. Price fixing is about worker working harder for

less money for the government to make profit, that is, the manufacturer or laborer get pay less

for government to profit. Secondly, if product is in demand, government increases the price for

consumer to pay more the government to profit.

Price fixing is a business of the government to profit from manufacture, and profit from

consumer that contradict the ethical principle that if you worker harder you make more money, is

the opposite of price fixing, you work harder to produce more for less money and consumer pay

more for less production. It is bad for who benefitted from price fixing, because, not the

manufacturer, not the worker, nor the consumer, but the government who set rule for pricing to

control what buy and sell. According to price fixing, you pay less for producing more and you

pay more for producing less. Therefore, there is no way for manufacture or consumer to profit.

In the Yale Law Journal, an article written by Robert H Bork, price fixing is an

“agreement not to compete by which consenting parties remove some or all of the competition

that likely to exist for pricing” to make profit with inflation because of demand, or deflation

because of surplus or because of better competitor. Such as, devalue the Twitter because the

Facebook is better and is in demand.

In conclusion, price fixing is bad because neither the maker of the product, who work

hard, nor the seller of the product, who make the product available for purchase, or the consumer

who buy the product for use make profit or have saying for what the product worth. In spite of

this, the government who assigned price make profit base on demand and surplus.

Reference

Bork, R. H. (1965). The Rule of Reason and the Per Se Concept: Price Fixing and Market

Division. The Yale Law Journal, 74(5), 775-847.

Rockoff, Hugh. (2013-07-27). The Concise Encyclopedia of Economics Price Controls. Library

of Economics and Liberty http://www.econlib.org/library/Enc/PriceControls.html

Scherer, F. M., & Ross, D. (1990). Industrial market structure and economic performance.

University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership

Historical Research Reference in Entrepreneurship.