Many economics argue that resale price maintenance ?
Correct answer: A. has a legitimate purpose of stopping discount retailers from free riding on the services provided by full services retailers?
- A. has a legitimate purpose of stopping discount retailers from free riding on the services provided by full services retailers?
- B. is price fixing and, therefore is prohibited by law
- C. is price fixing and therefore, is prohibited by law and enhances the market power of the producer
- D. enhances the market power of the producer
Explanation
Supporters of resale price maintenance argue that it prevents discount retailers from free riding on services such as demonstrations and advice provided by full-service retailers. Although it can also raise legal and competition concerns, this is the stated pro-competitive justification.
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