The core element of a free-market economy is price competition. When firms engage in pricing behaviors such as price collusion, price fixing, deceptive price advertising, predatory pricing, resale price maintenance, price confusion, and price discrimination, the pricing practices of firms have an enormous impact on public welfare. It is not surprising then that a great deal of government legislation and judicial decisions focuses on the pricing behavior of firms. Moreover, federal, state, and even local government agencies continually monitor firms’ pricing practices because consumers can be harmed. Economics researchers long have investigated the effects of pricing practices on specific markets, the economy, and consumer welfare. Marketing researchers only recently have begun to research pricing practices and their public policy implications actively. In this article, the authors review and organize the main public policy issues associated with pricing and identify research questions that need to be addressed.
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