How to Raise Prices

Does Fair Trade bring higher or lower prices? Last week, after a year-long study of the question, University of Chicago Economist Ward S. Bowman Jr. reported that Fair Trade tends to raise retail prices. As part of his research, Bowman picked a typical product, toothpaste, and 'checked retail prices all over the nation. Conclusion: in the 40 states that have Fair Trade laws, toothpaste costs 2% more than in free-trading states.

Some manufacturers, says Bowman, may find price-fixing necessary in special cases, e.g., to keep service dealers in business, to protect an investment in technical instruction to dealers. But most manufacturers do not have and do not want price maintenance, he says, for the simple reason that "it is inconsistent with selling the most merchandise at the lowest possible cost."

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