Smooth Sailing,Inc. ,conditions future shipments of its products to distributors on their agreement to charge the prices set by Smooth.This is
A)a barrier to entry.
B)a horizontal restraint.
C)a merger.
D)a vertical restraint.

Question

Quizplus · Accepted Answer

This is a classic example of a vertical restraint, where Smooth Sailing is imposing conditions on its distributors to charge the prices set by Smooth in exchange for future shipments of its products. This type of arrangement between manufacturers and distributors is common, but it has the potential to limit competition and consumer choice if it is applied too broadly.