Minimum prices on toys

In the past we have blogged about the incentive conflict between retailers and manufacturers, and how contracts on pricing can help manage the conflict. Last year, the Supreme Court reversed a 90 year old ruling that allowed manufacturers to set minimum prices as a means to enhance a brand's image and for retailers to make enough profit on their merchandise to provide better customer service. It appears that some toy manufacturers are doing so.

This season's products affected by pricing agreements include Guitar Hero World Tour Band Kit from Activision Blizzard Inc., documents show. The video musical game has been priced at $189 at Best Buy Inc., Circuit City Corp. and Toys "R" Us Inc. since its October release. A new rival product, Electronic Arts Inc.'s Rock Band 2 Special Edition, also has been retailing for that price at all three outlets.

"Activision Publishing Inc. would like to inform you of its Minimum Advertised ('MAP') program," the game maker wrote to retailers in a letter dated Sept. 24. The letter, which says it won't subsidize any advertisements that violate the policy, goes on to list 19 products and their minimum prices, including Guitar Hero and the James Bond: Quantum of Solace videogame.