The Economic Effects of Repealing Fair Trade Laws

Legislation in 1976 abolishing fair trade appears to have led to limited price cutting among retailers. In particular, stores identified by their managers as being “discount” outlets were found to have undercut the prices of other stores in most product groups while the pricing policies of chain stores and multi‐line stores have not become more aggressive on fair trade items since repeal. Limited evidence indicates that a reduction in nonprice competition in the form of newspaper advertising and sales personnel has also attended repeal. Finally, a substantial increase in the frequency of business failures in fair trade states during 1976 indicates that a consolidation among retailers may have coincided with the abolishment of uniform, manufacturer‐specified retail prices.