Sunday, January 27, 2013

A Regulated Price Floor

A supermarket's temporary price change is deemed illegal because prices are too low. Fresh Markets had a promotional offering of a gallon of milk for $2.99 but the State Agriculture and Forestry received a complaint and audited the store.
“They can sell it six percent over cost all day long. It’s when they sell it below cost that it becomes a problem,” State Agriculture and Forestry Commissioner Mike Strain told The Advocate.

And just what problem would that be? The buyer likes lower prices. The seller likes offering 'loss-leaders' every so often. The only ones harmed might be competitors or suppliers. Since competitors prefer softer competition they desire a government enforced cartel. Likewise, fiercer downstream  (supermarket) competition may serve to put downward pressure on upstream (dairy) wholesale prices. If this is the case, it would be yet another example of food producers getting special treatment from the government.

Hat tip: Craig Depken

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