Tuesday, April 16, 2002

CD Price fixing Will Cox pointed out a price fixing debate on CD sales.

What the charts actually show is that the elasticity of demand for CDs is about -1.5, which seems reasonable. The price fixing charge is better supported by all the labels having the same suggested retail price. Remember, the RIAA, operating as a cartel, offers CDs to (commodity) retailers at about $10 each. Anti-"red lining" laws enforce the cartel's agreement not to cheat in their collusive practices, so none of them give retailers price breaks. Retailers sell at marginal cost to consumers.


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