Deception in retailer high-low pricing: A “rule of reason” approach

Abstract Marking up to mark down and referring to a fictitious “regular” price in retail advertising can deceive consumers and cause consumer injury. The practice, known as high-low pricing, has become widespread in the intensely competitive retail environment. Consumers respond to this practice by drawing one of several inferences about the value of the product and the prevailing competitive price. Whether the consumer is deceived depends on the inference drawn. This paper integrates legal, public policy, consumer behavior, and retailing perspectives to examine the issue and propose retailer and regulatory solutions. To date, regulators have attempted to impose a “per se” approach. Through analysis of retailer motivations, consumer behavior and the May D&F case, a “Rule of Reason” approach is suggested as an alternative solution to this issue of significant concern to retailers and public policymakers alike.

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