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Government Regulations Affecting Price. Martin Williams EMKT 6110 Dr. Elaine Adams. Objectives. Define Price Gain an understanding of the factors that affect price Discuss the importance of government regulations on price Discuss and define 6 pricing issues that the government regulates

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Government regulations affecting price

Government Regulations Affecting Price

Martin Williams

EMKT 6110

Dr. Elaine Adams


Objectives
Objectives

  • Define Price

  • Gain an understanding of the factors that affect price

  • Discuss the importance of government regulations on price

  • Discuss and define 6 pricing issues that the government regulates

  • Name important regulation and laws related to price

  • Discuss enforcement

  • Discuss the importance of competition in our economy


Review what we already know
Review what we already know

  • What is Price?

  • The value of money (or its equivalent) placed on a good or service

  • Dependent on the “Value” a customer places on the product

  • The right price is: Whatever the customer is willing to pay!


Price is an important factor in the success or failure of any business

Price is an important factor in the success or failure of any business.

When the price is right,

everyone is happy!


Price helps maintain
Price helps maintain: any business.

  • Image

  • Competitive Edge

  • Profit


Price affects consumer perceptions
Price affects consumer perceptions any business.

  • Higher price sometimes equals better quality and upscale store

  • Lower price sometimes equals lower quality but usually means a bargain


Other factors affecting price
Other factors affecting price any business.

  • Cost and expense of producing and servicing product

  • Competition in the market

  • Supply and demand for the product

  • and…….


Government

Government any business.

Polices and Laws


Consider these issues
Consider these Issues any business.

  • Price-Fixing

  • Price discrimination

  • Resale price maintenance

  • Minimum Pricing

  • Unit Pricing

  • Price Advertising


Price fixing
Price Fixing any business.

  • When competitors agree on certain price ranges

  • Must be evidence of collusion (Communication between competitors)

  • Illegal because harms competition


Always remember competition is the cornerstone of

Always Remember Competition is the Cornerstone of : any business.

The Free Enterprise

System


Price discrimination
Price Discrimination any business.

  • When different prices are charged to similar customers in similar situations

  • Unfair for small competitors as well as consumers


Resale price maintenance
Resale Price Maintenance any business.

  • When Manufacturers force Retailers to sell for a certain price

  • Nine West Shoe Company recently fined

  • Government says this is a restraint on trade and anti-competitive


Minimum pricing

Minimum Pricing any business.

When Retailers sell below cost to drive competitors out of business


Unit pricing
Unit Pricing any business.

  • Consumers must be given the opportunity to compare prices in relation to a standard unit or measure

  • Food or packaged goods must be labeled properly


Price advertising
Price Advertising any business.

  • Forbid advertising a price reduction unless original price was offered to the public

  • Cannot say your prices are lower than competitors without proof

  • Bait-and-Switch is illegal


Important regulations affecting price
Important Regulations Affecting Price any business.

  • The Clayton Antitrust Act-covers price discrimination

  • The Sherman Antitrust Act covers price fixing

  • The Robinson-Patman Act covers both price discrimination and price fixing


Government regulates unfair trade practices
Government Regulates Unfair Trade Practices any business.

  • The Federal Trade Commission

  • The Justice Department

  • Local Communities / Better Business Bureau


The federal trade commission

The Federal Trade Commission any business.

Works to ensure markets are efficient and free of restrictions that harm consumers


Competition among businesses
Competition among Businesses any business.

  • Creates the lowest prices

  • Causes innovation and creativity in product selection and product quality

  • Strengthens the economy


Markets work best when
Markets work best when… any business.

  • Consumers make informed choices

  • Based on accurate information


Review
Review any business.

  • Price is the value of money placed on a good

  • Several factors affect price : cost / competition / supply and demand / government policy

  • Various antitrust laws promote competition and outlaw unreasonable restraints on trade

  • Federal Trade Commission and Better Business Bureau enforce and inform regulations of businesses

  • Competition makes economy strong and works to the consumers advantage


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