Key Concepts and Summary

Key Concepts and Summary

Firms are blocked by antitrust authorities from openly colluding to form a cartel that will reduce output and raise prices. Companies sometimes attempt to find other ways around these restrictions and, consequently, many antitrust cases involve restrictive practices that can reduce competition in certain circumstances, like tie-in sales, bundling, and predatory pricing.

Glossary

bundling

a situation in which multiple products are sold as one

exclusive dealing

an agreement that a dealer will sell only products from one manufacturer

minimum resale price maintenance agreement

an agreement that requires a dealer who buys from a manufacturer to sell for at least a certain minimum price

restrictive practices

practices that reduce competition but that do not involve outright agreements between firms to raise prices or to reduce the quantity produced

tying sales

a situation where a customer is allowed to buy one product only if the customer also buys another product