Final answer:
Price fixing is an illegal practice where companies collude to set prices. There are two types: horizontal and vertical price fixing.
Step-by-step explanation:
Price fixing is an illegal practice in which two or more companies collude to set the prices of their products or services artificially. There are two types of price fixing: horizontal price fixing and vertical price fixing.
Horizontal price fixing occurs when competitors at the same level of the supply chain, such as rival manufacturers or retailers, agree to set prices collectively. This eliminates competition and allows them to maintain higher prices and profits.
Vertical price fixing, on the other hand, involves a manufacturer and a retailer agreeing on the prices of goods sold to consumers. This type of price fixing can result in higher consumer prices and reduced competition in the retail market.