Monday, September 9, 2019

How are Price Fixing Agreements Unfair?

Carlos Delvasto, Illinois College of Law; Pontificia Universidad Javeriana Cali asks How are Price Fixing Agreements Unfair?

ABSTRACT: The present article advances the understanding of antitrust law by providing some theoretical considerations and empirical results of what people view as unfair regarding price-fixing agreements. Specifically, two theories were tested: the dual entitlement and double effect doctrine. Building on these theories, five hypotheses were formulated. People's attitudes towards price fixing were obtained through experimental surveys on Amazon Mechanical Turk in the United States. The empirical results suggest that people view it as unfair when they feel that businesses rip them off through unequal transactions, such as price fixing and other forms of collusive behavior. But there is more to it than that. People's price-fixing attitudes vary depending on the circumstances, such as when a cost increasing event affects firms' profits and firms price fixed to recoup the loss suffered or when a third-party benefit from the price fixing. Moreover, results suggest that people’s intuitions about price fixing are not static and move whenever the social and moral context changes. The fact that people care about rules of fairness when encountering antitrust scenarios indicates that antitrust law is not built on solid ground, not because economics is not important but because it itself is incomplete. The present research contributes to filling the gap that exists between antitrust law and morality by studying what is wrong about price fixing.

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