The Supreme Court is currently considering a case that would permit manufacturers to set a minimum price that retailers may charge for an item. This is previously settled case law for nearly a hundred years.
This leaves me befuddled as to what is the capitalist approach. On the one hand, a retailer and a manufacturer may have a contract that they have freely entered into and that may include such prices floors. On the other there is an issue of natural rights of ownership that says the retailer ought to be able to do whatever they see fit with their property to do business. From the consumer point of view price floors seem anticompetitive.
The rub comes in when the product fails to sell at the floor price. Is the retailer required to store the product forever? They can't throw or give it away because that would constitute selling it for a lower price. No more Filene's Basement type sales.
If the SCOTUS overturns this one, there are going to be some people caught in some very painful contracts in the coming years.
Subscribe to:
Post Comments (Atom)
3 comments:
Many years ago I set out to buy a mountain bike. I researched to figure out what I was willing to spend for the features I needed. I finally decided on a Specialized Rockhopper.
This decided, I set about shopping around to find the best price. I checked every bike shop in and around Austin. The price was always exactly the same. I checked bike shops not so near Austin, more out of curiosity - same story - same price.
Finally, after discussing the matter with experts and asking one retailer why they didn't sell this model, I learned that the price was fixed. Resellers were contracturally obligated to sell the same model for the same price.
However, they were not obligated to sell the bikes with stock components. The way that retailers were able to differentiate and compete were to change out pedals, add pedal cages, add bottle cages, add pumps, add saddle bags, and in some cases even upgrade tires. Sometimes other things were added like gloves, tire kits, etc.. Most of them also threw in service visits.
I think the supplier should have the right to set price floors and/or ceilings... contracturally, of course. It may change the complexion of competition, but it doesn't eliminate it. And, the retailer doesn't have to sell the product. Usually they choose to sell the product BECAUSE it gives them prestige or a competitive edge.
Business is business and anyone with a product to sell should have a right to determine the conditions of that business relationship.
Is all this talk about mountain bikes this a hint?
Not intended that way... do I detect a hint of guilt?
Post a Comment