Public Policy Issues in Pricing: Strategies and Initiatives

Public Policy Issues in Pricing: Strategies and Initiatives

Pratap Chandra Mandal (Indian Institute of Management Shillong, Shillong, India)
Copyright: © 2019 |Pages: 14
DOI: 10.4018/IJAMTR.2019070102

Abstract

Companies adopt pricing policies which maximize their revenues and profits generated. Sometimes, those pricing policies are not fair. The major public policy issues include unfair pricing practices within distribution channel levels such as price-fixing and predatory pricing, and across distribution channel levels such as retail price maintenance, deceptive pricing, and discriminatory pricing. Companies also set dynamic pricing. They set high prices for products to cover distribution costs, advertising and promotion costs, and excessive markups to generate extra revenues. Companies try adopting fair pricing policies. Laws and regulations are enforced to ensure it and that customers are benefited. However, sometimes it is difficult to ensure the legal and ethical aspects of pricing practices. Both governments and companies should be aware about the social goods used by customers and their pricing implications. Proper understanding and implementation of pricing policies will benefit both companies and customers and help in developing long-term customer relationships.
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2. Public Policy Concerns In Pricing

Governments of countries formulate a number of legislations to regulate business practices and ensure that fair trade takes place (Nagle et al., 2011). The important forms of legislation affecting pricing are the Sherman Act, the Clayton Act, and the Robinson-Patman Act (Nagle et al., 2011). These regulations were adopted to restrict the formation of monopolies and also to regulate business practices that might unfairly restrain trade. However, the regulations can only be applied to interstate commerce. To curb unethical business practices, some states adopt similar provisions which regulate companies that operate locally (Marn, Roegner, & Zawada, 2004). The major public policy issues in pricing include potentially damaging pricing practices within a given level of the channel (price-fixing and predatory pricing) and across levels of the channel (retail price maintenance, deceptive pricing, and discriminatory pricing) (Nagle et al., 2011).

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