Predatory pricing

Predatory pricing is the practice of a dominant firm selling a product at a loss in order to drive some or all competitors out of the market, or create a barrier to entry into the market for potential new competitors. The other firms must lower their prices in order to compete with the predatory pricer, which causes them to lose money, eventually driving them bankrupt. The predatory pricer then has fewer competitors or even a monopoly, allowing them to raise their prices above what the market would otherwise bear.

Related Topics:
Market - Barrier to entry - Monopoly

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In many countries, including the United States, predatory pricing is considered an anti-competitive practice and is illegal under antitrust laws. However, it is usually difficult to prove that a drop in prices is due to predatory pricing rather than normal competition.

Related Topics:
United States - Anti-competitive practice - Antitrust

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