Gadgets for Sale … or Not
Why you can’t get iPods at a discount.
“The minimum advertised price, or MAP, is the absolute lowest price retailers are allowed to advertise a product for. (If you’ve ever shopped at a site that won’t reveal a product’s price until you add it to your shopping cart, MAP is the reason.) MAP is usually enforced through marketing subsidies offered by a manufacturer to its resellers. If a retailer keeps prices at or above the minimum advertised price, then a manufacturer like Apple will give them money to help advertise. If a store’s price dips too low, on the other hand, the manufacturer can withdraw these advertising subsidies.”
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“There is a downside to all that stability, however. By limiting how low sellers can go, MAP keeps prices artificially high (or at least higher than they might otherwise be with unfettered price competition). In 2000, the Federal Trade Commission forced the five major record labels to suspend MAP policies that it deemed excessively restrictive. MAP benefits manufacturers and, to a lesser extent, retailers, but not necessarily consumers.”
►http://www.slate.com/articles/arts/gizmos/2006/12/gadgets_for_sale_or_not.html