Chapter 22 Predatory Pricing: Rare Like a Unicorn?
Object category:
Elektronische Ressource
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Date:
2008
Language:
Englisch
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Abstract:
Despite the discovery of predatory intent in several widely cited antitrust cases, many industrial organization economists have argued that predatory pricing is irrational and rarely observed. The argument is that pricing below cost in order to drive competitors out of the market will be irrational for two reasons: (1) there are more profitable ways (e.g., acquisitions) to eliminate competitors, and (2) future price increases will result in new entry. Decisions in antitrust cases have often resulted from documented predatory intent, which is sometimes attributed to an irrational motive for management to eliminate rivals. In the absence of a smoking gun, arguments turn on AreedaTurner cost-based tests, which are difficult to apply given the multi-product nature of most business operations. For these reasons, the issue of predatory pricing is a natural topic for laboratory studies where costs are induced directly.
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Created:
2023-04-13
Last changed:
2023-01-20
Added to portal:
2023-04-13
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