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To: Saturn V who wrote (183405)	2/3/2006 2:50:06 PM
From: Don Lloyd	Respond to of 186894

Saturn V, However as a part of the free market system, most major companies and the US government have a "standard clause" in their purchase contracts to prevent price gouging. If a XYZ company sells a machine to IBM for example, for $1 million, IBM can demand a refund if XYZ sells the same machine to some other company for less money within a certain time frame. IBM may even demand the right to audit the books of XYZ to put teeth into this clause. Such clauses are items of negotiation between sellers and purchasing agents. Company XYZ may try to wiggle out of this situation by claiming that each machine is custom designed, and the cheaper machine sold to someone else is a different product design. I would call this price protection rather than talking about price gouging, but this point is important. In many cases prescription drugs are priced even higher than they would be if they were simply monopoly supplied directly to consumer demand. Because of the buying dominance of insurance companies with prescription drug discount plans, the nominal price paid by uninsured consumers is artificially boosted due to the need to get adequate prices after all the effectively interlocked discounts. Normally a company would lose demand by raising prices, but if the price is the base of a discounting process, and if the size of the discount market is larger than the undiscounted market, then prices will be raised even if the undiscounted demand is impacted. Regards, Don