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Impact of International Price Fixing

Price fixing is an agreement between two or more parties aligned to the same side in a market to buy or sell a product at a set price. At global level some countries have been faced with claims of price fixing which has adverse effect on developing countries they trade with. The intent of price fixing is to push the price of a product high for the producing partners so as to increase profit margins. The players ensure market conditions of demand and supply are under their control since they dictate the prices of products for trade. The effect of sellers agreeing on minimum and maximum sale prices and terms of sale is a freelance state which gives them a chance to exploit the buyers with inflated prices. International price fixing by private entities can be prosecuted under the antitrust laws of many countries since it provides uncompetitive state that contradicts fair terms of trade.

The producers usually chose to form a cartel with the main goal of limiting completion in the world market. By restricting output and increasing the prices the participants jointly maximize the profits since they have raised prices above the marginal costs. The adverse effect of the private and public cartels easily influence the economic stability of the country involved at the expense of other economies. The cartels involved in international price fixing have on many instances been connected with international….

 

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