What does price fixing refer to in unethical pricing tactics?

Price fixing refers to the practice where competitors agree to set their prices at a certain level, rather than competing against each other by lowering prices. This collusion undermines the principles of free market competition and can lead to higher prices for consumers, as it eliminates the natural price competition that occurs when businesses independently set their pricing strategies.

In this context, agreeing on a set price with competitors creates a distorted market that can harm both consumers and other businesses that do not participate in the agreement. This unethical tactic often violates antitrust laws designed to promote fair competition and protect consumer interests.

The other options reflect pricing strategies that do not involve collusion among competitors. Charging different prices to various customers can be a common business practice based on market segmentation or discount strategies. Offering extremely low prices to outcompete others is known as predatory pricing, which is distinct from price fixing. Lastly, switching to a higher-priced product in advertisements suggests a marketing approach that does not inherently involve collusion or agreements among competitors. Therefore, these tactics do not align with the definition of price fixing.