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
DECEMBER 19, 2008
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