BEGINNER

Predatory Pricing

A strategic behavior of a firm to price goods below production costs with the intent to drive competition out of business. Although the “predator” expects to incur losses in during the process, it plans to recuperate all losses through monopoly pricing once the competition leaves the market. Losses from this strategy tend to be much larger for the company engaging this strategy as that company typically dvelops a larger market share than the competitors it is attempting to drive out of the market. 

 

Mark Hendrickson - The Truth About Monopolies and Antitrust Laws

 

Paul Cwik - Problems and Prices

Related Publications

ARTICLE

Overcoming Economic Ignorance

DECEMBER 19, 2008

Related Freeman Articles

ARTICLE

Gouging, Free Markets, and the Psychology of Fuel

Government: Keep out!

JULY 25, 2011 by PAUL SCHWENNESEN

By promoting the individual development and harnessing of fuel, we can avoid the pitfalls posed by centralized control.

THE CALLING

It’s Only Gouging When They Do It

Double standard.

MAY 12, 2011 by STEVEN HORWITZ

Those who complain about "price gouging" (some of whom are probably receiving higher wages through the same process) need to be consistent.

THOUGHTS ON FREEDOM

On Price Gouging

Is It Fair to Raise Prices after a Natural Disaster?

APRIL 01, 2005 by DONALD BOUDREAUX

ARTICLE

Herbert Dow and Predatory Pricing

Making the Best Product at the Lowest Price Beats Price Fixing

MAY 01, 1998 by BURTON FOLSOM

Related Multimedia

ONLINE EVENTS

FEE offers live online events for people new to the economic, ethical, and legal principles of a free society.

CURRENT ISSUE

November 2014

It's been 40 years since F. A. Hayek received his Nobel Prize. His insights, particularly on the distribution of knowledge and the impossibility of economic planning, remain hugely important today. In this issue, we look back on the influence of his work. Max Borders and Craig Biddle debate whether liberty must be defended from one absolute foundation, further reflections on Scottish secession, and how technology is already changing our world for the better--including how robots, despite the unease they cause, will only accelerate this process.
Download Free PDF

PAST ISSUES

SUBSCRIBE

RENEW YOUR SUBSCRIPTION

img E-mail Subscription

VIEW PRIVACY POLICY