A few years ago, a prominent pharmaceutical company was accused by the Justice Department of meeting with its competitors and entering into an explicit agreement with these competitors to fix the price of a commonly prescribed drug. (a) What is the difference between horizontal price fixing and vertical price fixing? Was this pharmaceutical company accused of horizontal price fixing or of vertical price fixing? Explain your reasoning. (b) Would the business practice that the pharmaceutical company was accused of be considered per se illegal or would the legality of this practice be judged by the rule-of-reason criterion? If the case had gone to trial, would “plus factors” have been considered to determine the trial’s outcome? Explain your reasoning. (c) Use the course material on the free-market economic system to explain why there are governmental laws against horizontal and vertical price fixing.
A few years ago, a prominent pharmaceutical company was accused by the Justice Department of meeting with its competitors and entering into an explicit agreement with these competitors to fix the price of a commonly prescribed drug. (a) What is the difference between horizontal price fixing and vertical price fixing? Was this pharmaceutical company accused of horizontal price fixing or of vertical price fixing? Explain your reasoning. (b) Would the business practice that the pharmaceutical company was accused of be considered per se illegal or would the legality of this practice be judged by the rule-of-reason criterion? If the case had gone to trial, would “plus factors” have been considered to determine the trial’s outcome? Explain your reasoning. (c) Use the course material on the free-market economic system to explain why there are governmental laws against horizontal and vertical price fixing.
Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
Section: Chapter Questions
Problem 1.1DQ
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- A few years ago, a prominent pharmaceutical company was accused by the Justice Department of meeting with its competitors and entering into an explicit agreement with these competitors to fix the price of a commonly prescribed drug.
(a) What is the difference between horizontal price fixing and vertical price fixing? Was this pharmaceutical company accused of horizontal price fixing or of vertical price fixing? Explain your reasoning.
(b) Would the business practice that the pharmaceutical company was accused of be considered per se illegal or would the legality of this practice be judged by the rule-of-reason criterion? If the case had gone to trial, would “plus factors” have been considered to determine the trial’s outcome? Explain your reasoning.
(c) Use the course material on the free-market economic system to explain why there are governmental laws against horizontal and vertical price fixing.
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