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Yes, price fixing in the USA is illegal. If the price on a book is listed at $25, then $25 before sales-tax is the most that can be charged.
But in this case, given that the ebook market is small and they want your business, they need to set more reasonable pricing overall. Also, if people go to say Mobipocket's site and see such high prices, that may put them off from buying a reader. "Why should I spend $350 on a device to read ebooks that cost as much as the pbook?" That's what can happen. It's not that they'll go and look on the net at PG or other sources of free books. They'll look at the shops and see what's there. I'm not talking tech savvy people. I'm talking regular people that don't know all that much about ebooks, but enough to sorta get them.
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