Question

Kate's Kups manufactures and sells plastic cups with designs on them. Pam's Party Store purchases the cups for $1.25 each in quantities of 500. Pam discovered that a national chain, a competitor of Pam's, buys the cups for $1.00 each for 1,000. If Pam's Party Store sues Kate's Kups for price discrimination _______.

Answer 1

Pam's Party Store may sue Kate's kups for selling the same plastic cups at different prices to different buyers, potentially violating laws against price discrimination. Legal precedents show fines for companies engaging in similar practices. The outcome depends on specific legislative criteria.

Step-by-step explanation:

If Pam's Party Store sues Kate's Kups for price discrimination, the underlying claim would be that Kate's Kups is engaging in a practice where the same product is sold at different prices to different buyers, which can be illegal under certain circumstances. For example, antitrust authorities fined major corporations for price fixing and market carving, which is related to price discrimination practices, as seen in cases involving Colgate-Palmolive, Henkel, Proctor & Gamble, and the icemakers. In assessing a potential lawsuit for price discrimination, one would have to consider the Robinson-Patman Act or similar legislation designed to prevent such practices in business transactions. The legality of Kate's Kups pricing strategy would depend on various factors including the intent and impact of the pricing difference, the ability to justify the price differential by cost savings, and the effect on competition.