Predatory pricing
Encyclopedia
In business
and economics
, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market
, or create barriers to entry
for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto
monopoly
, and hypothetically could then raise prices above what the market would otherwise bear.
Critics of the concept argue that it is a conspiracy theory
, that there are "virtually no... economists" who believe the theory behind the concept (although a few believe it is theoretically possible based on models, there are virtually none who believe it is an empirical phenomenon), and that there are no known examples of a company raising prices after vanquishing all possible competition.
In many countries predatory pricing is considered anti-competitive
and is illegal under competition laws
. It is usually difficult to prove that prices dropped because of deliberate predatory pricing rather than legitimate price competition. In any case, competitors may be driven out of the market before the case is ever heard.
, and will cause profits
to fall. There are various tests to assess whether the pricing is predatory: Areeda-Turner suggest it is below Short Run Marginal Costs, the AKZO case suggests it is costing below Average Variable Costs, and the case of United Brands suggests it is simply when the difference in cost between the cost of manufacturing and the price charged to consumers is excessive. Yet businesses may engage in predatory pricing as a longer term strategy. Competitors who are not as financially stable or strong may suffer even greater loss of revenue
or reduced profits
. After the weaker competitors are driven out, the surviving business can raise prices above competitive levels (to supra competitive pricing
). The predator hopes to generate revenues and profits in the future that will more than offset the losses it incurred during the predatory pricing period. This is known as recoupment, but two recent decisions by the courts, Tetra Pak II and Wanadoo stated that this is not necessary for a finding of predatory pricing.
In essence, the predator undergoes short-term pain for long-term gain. Therefore, for the predator to succeed, it must have sufficient strength (financial reserves, guaranteed backing or other sources of offsetting revenue) to endure the initial lean period. There must be substantial barriers to entry
for new competitors.
But the strategy may fail if competitors are stronger than expected, or are driven out but replaced by others. In either case, this forces the predator to prolong or abandon the price reductions. The strategy may thus fail if the predator cannot endure the short-term losses, either because of it requiring longer than expected or simply because it did not estimate the loss well.
So the predator should hope this strategy to succeed only when it is substantially stronger than its competitors and when barriers to entry
are high. The barriers prevent new entrants to the market replacing others driven out, thereby allowing supra competitive pricing
to prevail long enough to dwarf the initial loss.
illegal, but have severe restrictions.
.
Section 50(1)(c) of the Competition Act prohibits companies from the selling products at unreasonably low prices which is either designed to facilitate, or has the effect of, eliminating competition or a competitor. Section 50(1)(b) of the Act prohibits selling products in one area of Canada at prices lower than in another with the intention or effect of eliminating competition or a competitor. The Competition Bureau has established Predatory Pricing Guidelines defining what is considered to be unreasonably low pricing.
claims of monopolization
or attempts to monopolize. Businesses with dominant or substantial market share
s are more vulnerable to antitrust claims. However, because the antitrust laws are ultimately intended to benefit consumers, and discounting results in at least short-term net benefit to consumers, the U.S. Supreme Court
has set high hurdles to antitrust claims based on a predatory pricing theory. The Court requires plaintiffs to show a likelihood that the pricing practices will affect not only rivals but also competition in the market as a whole, in order to establish that there is a substantial probability of success of the attempt to monopolize. If there is a likelihood that market entrants will prevent the predator from recouping its investment through supra competitive pricing, then there is no probability of success and the antitrust claim would fail. In addition, the Court established that for prices to be predatory, they must be below the seller's cost.
in the 1993 case Brooke Group v. Brown & Williamson Tobacco, and the Federal Trade Commission
has not successfully prosecuted any company for predatory pricing since.
In addition, the predator's competitors know that it cannot keep its prices down forever, and thus need only play chicken to remain in the market, assuming they have the means to do so.
Thomas Sowell
explains one reason why predatory pricing is unlikely to work:
Critics of laws against predatory pricing may support their case empirically
by arguing that there has been no instance where such a practice has actually led to a monopoly. Conversely, they argue that there is much evidence that predatory pricing has failed miserably. For example, Herbert Dow not only found a cheaper way to produce bromine
but also defeated a predatory pricing attempt by the government-supported German cartel
Bromkonvention, who objected to his selling in Germany
at a lower price. Bromkonvention retaliated by flooding the US market with below-cost bromine, at an even lower price than Dow's. But Dow simply instructed his agents to buy up at the very low price, then sell it back in Germany at a profit but still lower than Bromkonvention's price. In the end, the cartel could not keep up selling below cost, and had to give in. This is used as evidence that the free market
is a better way to stop predatory pricing than regulation
s such as anti-trust laws.
In another example of a successful defense against predatory pricing, a price war
emerged between the NYCR
and the Erie Railroad
. At one point, NYCR charged only a dollar per car for the transport of cattle. While the cattle cars quickly filled up, management were dismayed to find that Erie Railroad had also invested in the cattle-haulage business.
Sowell argues:
and the theory of imperfect information have suggested that predatory pricing can be rational and profitable in some circumstances. For instance, by increasing production and lowering prices below costs, a firm may convince its competitors that it has achieved a lower cost of production than they— competitors may be led to believe the firm has high volume and low costs and may therefore believe it is not below cost but rather reflects greater business efficiency. It could lead them to conclude that competing would not be profitable. This is known as low-cost signaling. Eventually a small competitor may not have the resources to stay in business if a larger predator continues predatory pricing for long enough. However, this only suggests that a company might be able to successfully price other firms out of the market—there is no evidence to support the theory that the virtual monopoly could then raise prices, for as soon as they did that, other firms would rapidly be able to enter the market and compete. Anyhow most of outsiders are afraid to entering monopolized market. Such entering demands a lot of capital investments, which would not be repaid soon due to sharp decreasing of prices at the market provoked by resumption of competition. Another serious barriers to entering at the monopolized market, such as using by monopolies an intellectual property (patent protection), production and technological experience effect (first-mover advantage), high buyer switching costs (for example a lot of PC users are still use Microsoft products that switching to an alternative product would create significant costs for them) and control of key inputs and technologies (for example, power grids by power generating monopolies) usually making monopolised markets very complicated for outsiders in properties of Laissez-faire capitalism.
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
and economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market
Market
A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...
, or create barriers to entry
Barriers to entry
In theories of competition in economics, barriers to entry are obstacles that make it difficult to enter a given market. The term can refer to hindrances a firm faces in trying to enter a market or industry - such as government regulation, or a large, established firm taking advantage of economies...
for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto
De facto
De facto is a Latin expression that means "concerning fact." In law, it often means "in practice but not necessarily ordained by law" or "in practice or actuality, but not officially established." It is commonly used in contrast to de jure when referring to matters of law, governance, or...
monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
, and hypothetically could then raise prices above what the market would otherwise bear.
Critics of the concept argue that it is a conspiracy theory
Conspiracy theory
A conspiracy theory explains an event as being the result of an alleged plot by a covert group or organization or, more broadly, the idea that important political, social or economic events are the products of secret plots that are largely unknown to the general public.-Usage:The term "conspiracy...
, that there are "virtually no... economists" who believe the theory behind the concept (although a few believe it is theoretically possible based on models, there are virtually none who believe it is an empirical phenomenon), and that there are no known examples of a company raising prices after vanquishing all possible competition.
In many countries predatory pricing is considered anti-competitive
Anti-competitive practices
Anti-competitive practices are business or government practices that prevent or reduce competition in a market .- Anti-competitive practices :These can include:...
and is illegal under competition laws
Competition law
Competition law, known in the United States as antitrust law, is law that promotes or maintains market competition by regulating anti-competitive conduct by companies....
. It is usually difficult to prove that prices dropped because of deliberate predatory pricing rather than legitimate price competition. In any case, competitors may be driven out of the market before the case is ever heard.
Concept
In the short term predatory pricing through sharp discounting reduces profit margins, as would a price warPrice war
Price war is a term used in economic sector to indicate a state of intense competitive rivalry accompanied by a multi-lateral series of price reduction. One competitor will lower its price, then others will lower their prices to match. If one of them reduces their price again, a new round of...
, and will cause profits
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
to fall. There are various tests to assess whether the pricing is predatory: Areeda-Turner suggest it is below Short Run Marginal Costs, the AKZO case suggests it is costing below Average Variable Costs, and the case of United Brands suggests it is simply when the difference in cost between the cost of manufacturing and the price charged to consumers is excessive. Yet businesses may engage in predatory pricing as a longer term strategy. Competitors who are not as financially stable or strong may suffer even greater loss of revenue
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
or reduced profits
Profit (accounting)
In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
. After the weaker competitors are driven out, the surviving business can raise prices above competitive levels (to supra competitive pricing
Supra competitive pricing
Supracompetitive pricing is pricing above what can be sustained in a competitive market. This may be indicative of a business that has a unique legal or competitive advantage, or possibly of anti-competitive behavior that has driven competition from the market....
). The predator hopes to generate revenues and profits in the future that will more than offset the losses it incurred during the predatory pricing period. This is known as recoupment, but two recent decisions by the courts, Tetra Pak II and Wanadoo stated that this is not necessary for a finding of predatory pricing.
In essence, the predator undergoes short-term pain for long-term gain. Therefore, for the predator to succeed, it must have sufficient strength (financial reserves, guaranteed backing or other sources of offsetting revenue) to endure the initial lean period. There must be substantial barriers to entry
Barriers to entry
In theories of competition in economics, barriers to entry are obstacles that make it difficult to enter a given market. The term can refer to hindrances a firm faces in trying to enter a market or industry - such as government regulation, or a large, established firm taking advantage of economies...
for new competitors.
But the strategy may fail if competitors are stronger than expected, or are driven out but replaced by others. In either case, this forces the predator to prolong or abandon the price reductions. The strategy may thus fail if the predator cannot endure the short-term losses, either because of it requiring longer than expected or simply because it did not estimate the loss well.
So the predator should hope this strategy to succeed only when it is substantially stronger than its competitors and when barriers to entry
Barriers to entry
In theories of competition in economics, barriers to entry are obstacles that make it difficult to enter a given market. The term can refer to hindrances a firm faces in trying to enter a market or industry - such as government regulation, or a large, established firm taking advantage of economies...
are high. The barriers prevent new entrants to the market replacing others driven out, thereby allowing supra competitive pricing
Supra competitive pricing
Supracompetitive pricing is pricing above what can be sustained in a competitive market. This may be indicative of a business that has a unique legal or competitive advantage, or possibly of anti-competitive behavior that has driven competition from the market....
to prevail long enough to dwarf the initial loss.
Legal aspects
In many countries there are legal restrictions for using this pricing strategy, which may be deemed anti-competitive. It may not be de factoDe facto
De facto is a Latin expression that means "concerning fact." In law, it often means "in practice but not necessarily ordained by law" or "in practice or actuality, but not officially established." It is commonly used in contrast to de jure when referring to matters of law, governance, or...
illegal, but have severe restrictions.
Australia
Recent amendments to the Trade Practices Act 1974 in 2007 created a new threshold test to prohibit those engaging in predatory pricing. The amendments, labelled the 'Birdsville Amendments' after Senator Barnaby Joyce, penned the idea in s46 to define the practice more liberally than other behaviour by requiring the business first to have a 'substantial share of a market' (rather than substantial market power). This was made in a move to protect smaller businesses from situations where there are larger players, but each has market power. It has been criticised as preventing—through legal bureaucracy—large businesses removing old stock by offering discounts, such as fuel discounts and 'shopper dockets'Coupon
In marketing, a coupon is a ticket or document that can be exchanged for a financial discount or rebate when purchasing a product. Customarily, coupons are issued by manufacturers of consumer packaged goods or by retailers, to be used in retail stores as a part of sales promotions...
.
Canada
Section 50 of the Competition Act has been repealed.Section 50(1)(c) of the Competition Act prohibits companies from the selling products at unreasonably low prices which is either designed to facilitate, or has the effect of, eliminating competition or a competitor. Section 50(1)(b) of the Act prohibits selling products in one area of Canada at prices lower than in another with the intention or effect of eliminating competition or a competitor. The Competition Bureau has established Predatory Pricing Guidelines defining what is considered to be unreasonably low pricing.
United States
Predatory pricing practices may result in antitrustAntitrust
The United States antitrust law is a body of laws that prohibits anti-competitive behavior and unfair business practices. Antitrust laws are intended to encourage competition in the marketplace. These competition laws make illegal certain practices deemed to hurt businesses or consumers or both,...
claims of monopolization
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
or attempts to monopolize. Businesses with dominant or substantial market share
Market share
Market share is the percentage of a market accounted for by a specific entity. In a survey of nearly 200 senior marketing managers, 67 percent responded that they found the "dollar market share" metric very useful, while 61% found "unit market share" very useful.Marketers need to be able to...
s are more vulnerable to antitrust claims. However, because the antitrust laws are ultimately intended to benefit consumers, and discounting results in at least short-term net benefit to consumers, the U.S. Supreme Court
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
has set high hurdles to antitrust claims based on a predatory pricing theory. The Court requires plaintiffs to show a likelihood that the pricing practices will affect not only rivals but also competition in the market as a whole, in order to establish that there is a substantial probability of success of the attempt to monopolize. If there is a likelihood that market entrants will prevent the predator from recouping its investment through supra competitive pricing, then there is no probability of success and the antitrust claim would fail. In addition, the Court established that for prices to be predatory, they must be below the seller's cost.
Criticism
Some economists claim that true predatory pricing is rare because it is an irrational practice and that laws designed to prevent it only inhibit competition. This stance was taken by the US Supreme CourtSupreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
in the 1993 case Brooke Group v. Brown & Williamson Tobacco, and the Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
has not successfully prosecuted any company for predatory pricing since.
In addition, the predator's competitors know that it cannot keep its prices down forever, and thus need only play chicken to remain in the market, assuming they have the means to do so.
Thomas Sowell
Thomas Sowell
Thomas Sowell is an American economist, social theorist, political philosopher, and author. A National Humanities Medal winner, he advocates laissez-faire economics and writes from a libertarian perspective...
explains one reason why predatory pricing is unlikely to work:
- Obviously, predatory pricing pays off only if the surviving predator can then raise prices enough to recover the previous losses, making enough extra profit thereafter to justify the risks. These risks are not small.
- However, even the demise of a competitor does not leave the survivor home free. Bankruptcy does not by itself destroy the fallen competitor's physical plant or the people whose skills made it a viable business. Both may be available-perhaps at distress prices-to others who can spring up to take the defunct firm's place.
- The Washington Post went bankrupt in 1933, though not because of predatory pricing. But neither its physical plant, its people, or its name disappeared into thin air. Instead, publisher Eugene Meyer acquired all three-at a fraction of what he had bid unsuccessfully for the same newspaper just four years earlier. In the course of time, the Post became the biggest newspaper in Washington.
Critics of laws against predatory pricing may support their case empirically
Empirical method
The empirical method is generally taken to mean the approach of using a collection of data to base a theory or derive a conclusion in science...
by arguing that there has been no instance where such a practice has actually led to a monopoly. Conversely, they argue that there is much evidence that predatory pricing has failed miserably. For example, Herbert Dow not only found a cheaper way to produce bromine
Bromine
Bromine ") is a chemical element with the symbol Br, an atomic number of 35, and an atomic mass of 79.904. It is in the halogen element group. The element was isolated independently by two chemists, Carl Jacob Löwig and Antoine Jerome Balard, in 1825–1826...
but also defeated a predatory pricing attempt by the government-supported German cartel
Cartel
A cartel is a formal agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve homogeneous products...
Bromkonvention, who objected to his selling in Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
at a lower price. Bromkonvention retaliated by flooding the US market with below-cost bromine, at an even lower price than Dow's. But Dow simply instructed his agents to buy up at the very low price, then sell it back in Germany at a profit but still lower than Bromkonvention's price. In the end, the cartel could not keep up selling below cost, and had to give in. This is used as evidence that the free market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
is a better way to stop predatory pricing than regulation
Regulation
Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation on the one hand and judge-made law on the other...
s such as anti-trust laws.
In another example of a successful defense against predatory pricing, a price war
Price war
Price war is a term used in economic sector to indicate a state of intense competitive rivalry accompanied by a multi-lateral series of price reduction. One competitor will lower its price, then others will lower their prices to match. If one of them reduces their price again, a new round of...
emerged between the NYCR
New York Central Railroad
The New York Central Railroad , known simply as the New York Central in its publicity, was a railroad operating in the Northeastern United States...
and the Erie Railroad
Erie Railroad
The Erie Railroad was a railroad that operated in New York State, New Jersey, Pennsylvania, Ohio, Indiana, and Illinois, originally connecting New York City with Lake Erie...
. At one point, NYCR charged only a dollar per car for the transport of cattle. While the cattle cars quickly filled up, management were dismayed to find that Erie Railroad had also invested in the cattle-haulage business.
Sowell argues:
- It is a commentary on the development of antitrust law that the accused must defend himself, not against actual evidence of wrongdoing, but against a theory which predicts wrongdoing in the future. It is the civil equivalent of "preventive detention" in criminal cases—punishment without proof.
Support
Since the early 1980s, economic models based on game theoryGame theory
Game theory is a mathematical method for analyzing calculated circumstances, such as in games, where a person’s success is based upon the choices of others...
and the theory of imperfect information have suggested that predatory pricing can be rational and profitable in some circumstances. For instance, by increasing production and lowering prices below costs, a firm may convince its competitors that it has achieved a lower cost of production than they— competitors may be led to believe the firm has high volume and low costs and may therefore believe it is not below cost but rather reflects greater business efficiency. It could lead them to conclude that competing would not be profitable. This is known as low-cost signaling. Eventually a small competitor may not have the resources to stay in business if a larger predator continues predatory pricing for long enough. However, this only suggests that a company might be able to successfully price other firms out of the market—there is no evidence to support the theory that the virtual monopoly could then raise prices, for as soon as they did that, other firms would rapidly be able to enter the market and compete. Anyhow most of outsiders are afraid to entering monopolized market. Such entering demands a lot of capital investments, which would not be repaid soon due to sharp decreasing of prices at the market provoked by resumption of competition. Another serious barriers to entering at the monopolized market, such as using by monopolies an intellectual property (patent protection), production and technological experience effect (first-mover advantage), high buyer switching costs (for example a lot of PC users are still use Microsoft products that switching to an alternative product would create significant costs for them) and control of key inputs and technologies (for example, power grids by power generating monopolies) usually making monopolised markets very complicated for outsiders in properties of Laissez-faire capitalism.
Examples of alleged predatory pricing
- Standard Oil Company - In 1909, the US Department of Justice sued Standard under federal anti-trust law, the Sherman Antitrust Act of 1890, for sustaining a monopoly and restraining interstate commerce. The government said that Standard raised prices to its monopolistic customers but lowered them to hurt competitors, often disguising its illegal actions by using bogus supposedly independent companies it controlled.
"The evidence is, in fact, absolutely conclusive that the Standard Oil Company charges altogether excessive prices where it meets no competition, and particularly where there is little likelihood of competitors entering the field, and that, on the other hand, where competition is active, it frequently cuts prices to a point which leaves even the Standard little or no profit, and which more often leaves no profit to the competitor, whose costs are ordinarily somewhat higher."
- France Telecom/Wanadoo—The European Court of Justice judged that Wanadoo (Now Orange Internet France) charged less than cost in order to gain a lead in the French broadband market. They have been ordered to pay a fine of €10.35m, although this can still be contested.
- Microsoft released their web-browser Internet Explorer for free. As a result the market leader and primary competitor, Netscape, was forced to release Netscape Navigator for free in order to stay in the market. Internet Explorer's free inclusion in Windows led to it quickly becoming the web browser used by most computer users.
- According to an AP article a law in MinnesotaMinnesotaMinnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., it is the twenty-first most populous, with 5.3 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the thirty-second state...
forced Wal-Mart to increase its price for a one month supply of the prescription birth control pill Tri-Sprintec from $9.00 to $26.88. - According to a New York Times article the German government ordered Wal-MartWal-MartWal-Mart Stores, Inc. , branded as Walmart since 2008 and Wal-Mart before then, is an American public multinational corporation that runs chains of large discount department stores and warehouse stores. The company is the world's 18th largest public corporation, according to the Forbes Global 2000...
to increase its prices. - According to an International Herald Tribune article, the French government ordered amazon.comAmazon.comAmazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...
to stop offering free shipping to its customers, because it was in violation of French predatory pricing laws. After Amazon refused to obey the order, the government proceeded to fine them €1,000 per day. Amazon continued to pay the fines instead of ending its policy of offering free shipping. - Low oil prices during the 1990s, while being financially unsustainable, effectively stifled exploration to increase production, delayed innovation of alternative energy sources and eliminated competition from other more expensive yet productive sources of petroleum such as stripper wellStripper wellA stripper well or marginal well is an oil or gas well that is nearing the end of its economically useful life. In the United States of America a "stripper" gas well is defined by the Interstate Oil and Gas Compact Commission as one that produces or less of gas per day at its maximum flow rate;...
s. - In the Darlington Bus WarDarlington Bus WarThe Darlington Bus War refers to a series of events between 1986 and 1995 in the UK bus industry in the town of Darlington, northern England, culminating in the wholesale entry of Stagecoach Group onto the Darlington bus scene, and the collapse of Darlington Corporation Transport.In November 1994,...
, Stagecoach GroupStagecoach GroupStagecoach Group plc is an international transport group operating buses, trains, trams, express coaches and ferries. The group was founded in 1980 by the current chairman, Sir Brian Souter, his sister, Ann Gloag, and her former husband Robin...
offered free bus rides in order to put the rival Darlington Corporation Transport out of business.
See also
- DumpingDumping (pricing policy)In economics, "dumping" is any kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market, or in quantities that cannot be explained through normal market...
- Price discriminationPrice discriminationPrice discrimination or price differentiation exists when sales of identical goods or services are transacted at different prices from the same provider...
- Robinson–Patman Act (US Federal law passed in 1936)
- Contestable marketContestable marketIn economics, the theory of contestable markets, associated primarily with its 1982 proponent William J. Baumol, holds that there exist markets served by a small number of firms, which are nevertheless characterized by competitive equilibria because of the existence of potential short-term...
External links
- Predatory Legislature, William L. Anderson, Ph.D. Professor of Economics
- Predatory Pricing Laws: Hazardous to Consumers Health, Donald J. Boudreaux, Ph.D. Economics
- Predatory Pricing: Strategic Theory and Legal Policy, Patrick Bolton, Ph.D. Professor of Finance and Economics
- Predatory Prosecution, Thomas Sowell, Ph.D. Professor Emeritus of Economics
- The Myth of Predatory Pricing, Thomas J. DiLorenzo, Ph.D. Professor of Economics
- 3M Company FKA Minnesota Mining and Manufacturing Company v. LePage’s Incorporated, et al., U.S. Supreme Court No. 02-1865
- EU court upholds antitrust fine against France Telecom unit
- FTC Staff Concludes that Alabama Motor Fuels Marketing Act Restricts Competition, Re: The Alabama Motor Fuels Marketing Act
- Predatory Pricing Report