What defines vertical price fixing?

Vertical price fixing is defined as collusion between manufacturers and retailers to control prices. This practice occurs when manufacturers dictate the price at which retailers can sell their products, effectively setting a minimum price to be charged. This form of collusion can undermine the free market by eliminating price competition among retailers, which could lead to higher prices for consumers.

By establishing these fixed prices, manufacturers can maintain their desired profit margins and protect their brand image, but it can also lead to legal issues as it may violate antitrust laws designed to promote competition and protect consumers. Understanding this concept is key to grasping broader themes of price manipulation and market regulation within the context of marketing.

The other options fail to characterize vertical price fixing accurately; for instance, collusion at the same level of the market pertains to horizontal price fixing, which involves competition among similar businesses rather than coordination between different levels of the distribution chain.