How do you determine predatory pricing?
To prevail on a predatory-pricing claim, plaintiff must prove that (1) the prices were below an appropriate measure of defendant’s costs in the short term, and (2) defendant had a dangerous probability of recouping its investment in below-cost prices.
How does predatory pricing affect markets?
In a predatory pricing scheme, prices are set low in an attempt to drive out competitors and create a monopoly. Consumers may benefit from lower prices in the short term, but they suffer if the scheme succeeds in eliminating competition, causing a rise in prices and a decline in choice.
What is the difference between predatory pricing and price discrimination?
The principal part of predatory pricing is the operator in the seller’s market, and the operator has certain economic or technical strength. This feature distinguishes it from price discrimination, which includes not only competition between sellers but also competition among buyers.
What are some examples of predatory pricing?
If you had a competitor that was selling a TV at $100, and you sold the same TV at $80 (while taking a loss) because you knew they couldn’t beat your price, you’re inacting in predatory pricing. This is illegal in many countries and is treated very harshly by many justice systems.
Why predatory pricing is bad?
Why does the issue matter? One main reason is that there are strictures against predatory pricing in U.S. antitrust law. The more rare predatory pricing is, the more likely it is that successful prosecutions of alleged predatory pricing are unwitting attacks on healthy price competition.
Who investigates predatory pricing?
Although the FTC examines claims of predatory pricing carefully, courts, including the Supreme Court, have been skeptical of such claims.
What is an example of price discrimination?
Many industries, such as the airline industry, the arts and entertainment industry, and the pharmaceutical industry, use price discrimination strategies. Examples of price discrimination include issuing coupons, applying specific discounts (e.g., age discounts), and creating loyalty programs.
Which law states that predatory pricing is illegal?
American antitrust laws
American antitrust laws exist to preserve competition in the market and minimize monopoly power, and according to those laws, most forms of predatory pricing are illegal.
What is a predatory personality?
Predatory Aggressive Personalities (i.e., psychopaths or sociopaths) consider themselves superior to the rest of the human race. They view individuals with inhibitions rooted in emotional bonding to others as inferior creatures and, therefore, their rightful prey.