Mod5-TD-Price Control and Fair Trade Laws

Running head : FAIR TRADE LAWS

Fair Trade Laws

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Abstract

Fair trade laws were set up to protect retailers from unfair competition in the Untied States . These laws were later repealed as manufacturers slowly abandoned them . This will explain the Fair Trade laws , why they were repealed and the effect of price control by manufacturers Fair Trade Laws

Fair trade laws are statutes passed in the United States that gave manufacturers the authority to set minimum retail prices for the commodities they produced

. The adoption of these laws was prompted by the need to protect retailers from unfair price-cutting competition largely initiated by bigger chain stores (Factmonster , 2007

Fair trade laws were repealed later because of their growing unpopularity . Many manufacturers faced difficulties in enforcing these laws and slowly abandoned them forcing many jurisdictions to repeal them (Factmonster , 2007 . Still , antitrust studies revealed that fair trade pricing would eventually lead to elimination of competition . It was assumed that this was defiance to the principles of a free trade system therefore repeal of the laws was necessary (TIME , 1955

Manufacturers should not be allowed to force retailers to sell their products at specified prices . To retailers , this would cut out the competition that characterizes a free market thus interfering with the marketing strategies that different retailers would wish to lay down Consumers are also bound to lose since a non- competitive market implies standard prices for goods . With competition in the market retail outlets are bound to...