Question

quizzes and tests
total points: -/150
attempts left: 1
seafood house was a chain of restaurants in cape cod, massachusetts. it was the primary buyer of seafood in the region, and as a result, had the power to negotiate a relatively cheap price on most seafood. the peppery crab was a national chain of seafood restaurants that wanted to get into the cape cod market. it negotiated a price with the seafood producers that was higher on the condition that seafood house must also pay that price. the fish producers agreed. is this scheme legal?
yes, because the peppery crab is a competitor, it can use its market power to put pressure on a competitor
yes, seafood house had previously negotiated a low price, and the new price was closer to the market equilibrium.
no, this is an example of predatory pricing and is illegal under the sherman act.
no, this is an example of horizontal price - fixing and is illegal under the sherman act.

Explanation:

The Peppery Crab, as a national chain, negotiating a price with producers that forces Seafood House to pay the same higher - price is an example of price - fixing. Horizontal price - fixing occurs when competitors agree on prices, and it is illegal under the Sherman Act. Predatory pricing involves setting prices low to drive out competitors, which is not the case here.

Answer:

No, this is an example of horizontal price - fixing and is illegal under the Sherman Act.