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Problem 17

What is exclusive dealing? How might it reduce co…

01:58
Problem 16

What is a minimum resale price maintenance agreement? How might it reduce competition and when
might it be acceptable?

Answer

Antitust laws are the laws and regulations that are imposed by government or authorities to
ensure the increased competitiveness in the market. It also helps observe and control mergers
and acquisition taking place between big or key firms.
Minimum resale price agreement is triee controlwhich is impoducer on dealers
to not sell good blow some ie delers are not allowed to sell lilower than certain price
decired in agreement Itreduces competition because now every dealer can enioy some levelof
profis and the prices are not triven by competition betition betition between dealers. But such agreemenents are acceptalle when the price controls are iugessitions to the dealers and there is no contractual
binding.


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Video Transcript

everyone today we were walking through Problem number 16 from chapter 11 of the textbook, which asks us what is a minimum resale price maintenance agreement. How might it reduce competition and one might be acceptable. So, um, I've taken out a section of reading from our, um from this chapter. Um, that would help us answer this question in particular, um, unless re through together antitrust law who includes rules against restrictive practices, processes that do not involve outright agreements to various price or to reduce the quantity produce blob of, ah, anti trusts. But that might have the effect of reducing competition. Antitrust cases involving Richardson Restrictive practice practices are often controversial because they dull into specific contracts or agreements between firms that are allowed in some cases but not in public. So, for example, if a product manufacturer selling to a group of dealers, so we have a manufacturer selling to a group of dealers booth on cell to the general public, it is illegal for the manufacturers to demand and minimum resale price maintenance agreement, which would require the dealers to sell for at least a minimum. I certainly minimum price just to walk through that um What? How are we going to Sorry, I'm having trouble underlying stuff. So how we're going to define this word right here? Minimum Michelle price maintenance agreement is that it is an agreement which require the dealers from a manufacturer to sell for at least a certain minimum. That's so these dealers are from that manufacture and they have to sell for a certain minimum price. That's how you define it. Um, all right, I'll move into green now to answer the second question. How might this reduce competition? While a minimum price contract is illegal because it was strict competition among So to explain that in green, basically this reduces competition because there is on Lee one low price on this one. Low price is the price that dealers do not go below so logically. That is why it restricts competition. Another word waiting another way to phrase this is that the dealers can't undercut that place. That's why it restricts competition on. Thus, this limits us from putting items on sale to track business. That one that's dealers from Sally to attract business. So that is why um, a minimum resale price maintenance agreement is going to restrict competition. Now in ride, I'll answer the last question. One. Might the minimum resale price maintenance agreement be acceptable? So if we read on it says, however, the manufacturer is legally allowed to suggest importations minimum prices and to stop selling to dealers who regularly underfoot the suggested price. So what I've just underlined in red, um, it is only acceptable. One of many fax fracture suggests a price. So that is it because it is a lot of to suggest mint on the price is, um so that is allowed. And they say you're right. If you think this real sounds like the subtle distinction, you are right. But that is how it works in economics. I guess so. There you have it. If you guys enjoyed my video explanation of this problem, please, with the lifeblood and next to it. I hope you all have a nice day. And thank you for watching

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