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Unethical Pricing Practices

The document outlines various unethical pricing practices, including price fixing, price skimming, price discrimination, bid rigging, and price wars. These practices involve collusion, manipulation of prices, and competitive rivalry that can harm both businesses and consumers. Understanding these practices is essential for recognizing and combating unethical behavior in the marketplace.

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bhavindh
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42 views1 page

Unethical Pricing Practices

The document outlines various unethical pricing practices, including price fixing, price skimming, price discrimination, bid rigging, and price wars. These practices involve collusion, manipulation of prices, and competitive rivalry that can harm both businesses and consumers. Understanding these practices is essential for recognizing and combating unethical behavior in the marketplace.

Uploaded by

bhavindh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Unethical Pricing Practices

1. Price fixing - an agreement between business competitors to sell the same product or
service at the same price.
2. Price skimming - a pricing strategy in which a marketer sets a relatively high price for a
product or service at first, then lowers the price over time. It allows the firm to recover
its sunk costs quickly before competition steps in and lowers the market price.
3. Price discrimination - exists when sales of identical goods or services are transacted at
different prices from the same provider.
4. Bid rigging - an agreement between two or more competitors. It is a form of collusion,
which is illegal in most countries. It is a form of price fixing and market allocation, and it
involves an agreement in which one party of a group of bidders will be designated to
win the bid. It is often practised where contracts are determined by a call for bids, for
example in the case of government construction contracts.
5. Price war - is a term used in business to indicate a state of intense competitive rivalry
accompanied by a multi-lateral series of price reductions. One competitor will lower its
price, then others will lower their prices to match. If one of the reactors reduces their
price below the original price cut, then a new round of reductions is initiated. In the
short-term, price wars are good for consumers who are able to take advantage of lower
prices. Typically they are not good for the companies involved. The lower prices reduce
profit margins and can threaten survival.

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