Final answer:
A minimum resale price maintenance agreement is the practice of setting a minimal list price to prevent competition among dealers. It is illegal to demand such an agreement but manufacturers can suggest minimum prices and stop selling to dealers who regularly undercut the suggested price.
Step-by-step explanation:
The practice of setting a minimal list price rather than relying on sales is called minimum resale price maintenance agreement. This agreement allows a manufacturer to suggest a minimum price for their product and stop selling to dealers who regularly undercut the suggested price. By setting a minimum price, the manufacturer aims to prevent competition among dealers and maintain a certain level of profit margin.
However, it is important to note that demanding a minimum resale price maintenance agreement is illegal as it restricts competition. Manufacturers can only suggest a price without requiring dealers to adhere to it.
Overall, a minimum resale price maintenance agreement can help reduce competition by establishing a minimum price, but it must be carefully implemented to comply with legal regulations.
Minimum resale price maintenance agreements define the lowest price a retailer can sell a product, which reduces competition by preventing retailers from setting their own lower prices. While generally illegal, manufacturers can suggest minimum prices and may refuse to supply to non-compliant retailers.
Setting a minimal list price rather than relying on sales is referred to as minimum resale price maintenance (RPM) agreement. A minimum resale price maintenance agreement is a practice used by manufacturers that stipulates the lowest price at which a retailer can sell a product. These agreements are controversial because they can hinder competition by preventing retailers from setting their own pricing below a certain threshold.
Under a minimum resale price maintenance agreement, competition among dealers might be reduced as they are restricted from offering lower prices than those set by the manufacturer. This practice is generally illegal because it violates antitrust laws designed to encourage competition and prevent price fixing. However, manufacturers may 'suggest' minimum prices and choose not to do business with dealers who do not adhere to these suggestions, creating a nuanced difference in the implementation of pricing policies.