CHAPTER 16OLIGOPOLY369have been used to condemn some business practices whose effects are not obvious.Here we consider three examples.Resale Price MaintenanceOne example of a controversial businesspractice is resale price maintenance,also called fair trade.Imagine that SuperduperElectronics sells VCRs to retail stores for $300. If Superduper requires the retailersto charge customers $350, it is said to engage in resale price maintenance. Anyretailer that charged less than $350 would have violated its contract withSuperduper.At first, resale price maintenance might seem anticompetitive and, therefore,detrimental to society. Like an agreement among members of a cartel, it preventsthe retailers from competing on price. For this reason, the courts have oftenviewed resale price maintenance as a violation of the antitrust laws.Yet some economists defend resale price maintenance on two grounds. First,they deny that it is aimed at reducing competition. To the extent that Superduper
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