This is the Cato Daily Podcast for Tuesday, August 26, 2008. I'm Caleb Brown.

After a recent Supreme Court decision, many businesses are now engaging in price fixing.

So how is it possible that consumers can benefit from a world in which businesses might be

charging higher prices than they otherwise would prefer?

Tom Fyri, managing editor of Regulation magazine comments.

Back in 1911, the Supreme Court ruled that any sort of an arrangement where a wholesaler or a producer of some good sets a minimum price for retailers is per se illegal. That is court should rule that it's illegal in a

violation of the Sherman Antitrust Act, you know, regardless of any circumstances.

Last year the court reversed that decision. It didn't say that all such

arrangements are legal. It instead said the courts have to rule on each case on

the merits of that case. They have to use a rule of reason

to try to decide whether it's a consumer beneficial arrangement

or a harmful arrangement for consumers.

And in this case, the court was on very good grounds.

Starting in the 1960s, the University of Chicago

economists began finding instances where some sort of a minimum price for could be beneficial to

consumers in certain circumstances and so basically what the Supreme Court

ruled is you have to find out if this particular case that has been brought to trial is a case where the

minimum price floor ultimately works to the benefit of consumers or if it works to their to their detriment.

Now what are giving an example of where retailers being forced to charge presumably a higher price than they

might otherwise want to charge for a product

actually benefits consumers.

The classic example that was brought up by the Chicago economist is a case where it's a

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