The application of fixed prices is a means, which is used in many states, in order to prevent a competition over the price. Goals can be thereby the quality assurance of commodity or marketing form, a making possible of transverse subsidies or a reduced inducement. Low prices in connection with a granted subsidy are partly prescribed.

The price can be specified either by the manufacturer, by combinations of all offerers or by the state. In planned-economy organized states a definition of the prices is by the state the rule.

In Germany the among other things following the application of fixed prices is subjected:

• Prescription-requiring medicines (only pharmacy-requiring medicines since 1 January 2004 no more)
• Books and magazines
• Cigarettes (for fiscal reasons)
• Transport-repay for most taxi travels
• Rents in the social housing construction

Apart from the nationally prescribed applications of fixed prices it gives also contractually between manufacturers and dealers agreed upon applications of fixed prices. They are called vertical applications of fixed prices or applications of fixed prices of the second hand. Such arrangements are often forbidden, because they obstruct the competition between the retailers. In Germany they are no longer permissible since 1 January 1974 after "§ 14 GWB; before they were with branded articles the rule. An exception form to today books and magazines (see book application of fixed prices).

Sometimes De-Facto-application of fixed prices is made also by recommended selling prices (" noncommittal price recommendation "). In the anglo-saxon area books have under normal conditions such inscriptions (recommended retail price) and therefore also usually at this price are sold, it give however special offers (" 3 for 2 "). Price recommendations, which want to intersperse manufacturers approximately by supply lieferungsverweigerung to indignant dealers, are however usually not tolerated, as far as also genuine applications of fixed prices are forbidden.

Problems of national price adjustment

From national application of fixed prices the following problem can result, if the determined price is too low: For offerers of a commodity the production of the commodity becomes uneconomic. Instead of implementing the national goal, a low price for the consumers, the offer will disappear therefore more scarcely or completely. On the black market the goods are however further available at a higher, free market price.

Another problem results from a too high fixed price. The illegal import of such products of national territories with no or lower price limit is worthwhile itself. Follows smuggling-classical examples are the cigarette smuggling to Germany or also Great Britain as well as the liquor smuggling into Scandinavian countries.

Articles in category "Application of fixed prices"

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