I was in Pennsylvania last night, and I went to a convenience store where the milk gallons were supposedly being sold at “THE LOWEST PRICES ALLOWABLE BY LAW”. I often see that sort of thing for cigarettes too. Is there really such a price? I’d imagine there’s a “minimum” price in the sense that the government might collect X dollars of taxes on a certain item, and you would need to charge at least that much to cover the tax. But is there really a legal minimum?
Let’s say I am a convenience store owner, and I get really fired-up with the holiday spirit and have a “1 Cent Milk And Cigarettes Day”, and I pay for the applicable taxes out of my own pocket. Would I get the cops knocking on my door, or what?
Prices for milk in PA are set by the Penn. Milk Marketing Board. This was set up during the flurry of stupidity that followed the great depression. I was not able to find out what the penalties for breaking the law are, but it is illegal to sell milk in PA below a certain price.
Unlikely that the NJ cigarette market has an artificial floor, since they’re usually only applied to nondurable necessities- like milk.
The minimum price of a tobacco product is generally going to depend on production cost and taxes (mostly taxes)… so there will be an economic minimum, if not a legal one.
Could it be that it is illegal to use some products as loss leaders? That is, selling one product at a price lower than what the merchant payed + taxes to draw people into the shop so that he can make a profit on the other stuff.
I would imagine that alcohol and maybe tobacco would fit into this category.
With some products (alcohol and cigarettes are common examples), you are not allowed to sell at below your cost as a loss-leader. Also, some states have laws mandating uniform pricing by distributors (i.e. no discounts for preferred or high volume customers). In many areas, the distributorship of certain products is either a de facto or real monopoly (if you want to sell RJR Tobacco products in a certain state, you may have to buy them from the state’s RJR branch or distributor, because buying it out of state would mean paying both state’s taxes - as a purchaser in the other state, and then as an “importer” to your state) In such cases, the distributor may require retailers to agree to a fixed floor to prevent price wars.
While travelling in the 80s, I saw two quite different ‘lowest prices allowed by law’ on beer in the same town. The justification I was given was that the only relevant local law was a fairly ambiguous ‘no loss leader’ provision, which left a lot of leeway in how a store calculated its ‘cost and expenses’ of sale, but customers from across the border (the state line, I presume) expected to see such a sign.
This created the possibility that a bargain hunting out of state buyer, seeking to stock up, might avoid a honest shop with lower prices, in favor of a higher priced, more manipulative store with the expected comforting sign. Certainly the ‘lowest price’ sign didn’t mean it wasn’t cheaper down the road.
I would like to think they patched that law in the past 20 years, but state legislatures aren’t always very concerned with protecting tax-evading out of state buyers from their own avarice. (many states, like Massachusetts, have much-ignored laws that require you to pay a ‘use tax’ on almost anything you bring into the state.