The manufacturer of South Face sells jackets to retail stores for $105 each, and it requires the retail stores to charge customers $135 per jacket. Any retailer that charges less than $135 would violate its contract with South Face. What do economists call this business practice?

Question

Quizplus · Accepted Answer

This business practice is known as resale price maintenance, where the manufacturer sets a minimum retail price for its product, and retailers are required to adhere to this price or higher when selling the product to consumers.

The Manufacturer of South Face Sells Jackets to Retail Stores