Assume a monopolist regularly posts price increases three months in advance of when they will take effect.After a small number of new firms enter the market,the original firm continues the practice of announcing price increases in advance.Following the court's logic in the Ethyl case,the firms in this market would not be guilty of price fixing behavior.

Question

Quizplus · Accepted Answer

In the Ethyl case, advance announcement of price changes was not considered evidence of price fixing, especially if the practice was consistent before and after the entry of new competitors. The court reasoned that such announcements could be part of a competitive strategy rather than a mechanism for coordinating prices among competitors.

Assume a Monopolist Regularly Posts Price Increases Three Months in Advance