The dilemma is intensified by recent legal and economic developments. On the one hand, history and economic theory teach that predatory pricing can be an instrument of abuse, but on the other side, price reductions are the hallmark of competition, and the tangible benefit that consumers perhaps most desire from the economic system.
Predatory pricing poses a dilemma that has perplexed and intrigued the antitrust community for many years. Cost Signaling Combined with Reputation Effect: Theory.Illustration: Bogus Competition in the Tobacco Industry.Acquisition of Prey’s Assets by Successor Firm.Possible Objections and Counter Strategies.Illustration: Entry into Eastern Coffee Market.Demand Signaling: Test-Market and Signal Jamming.Cost Signaling, Demand Signaling and Other Predatory Strategies.Illustration: Entry into Local Telephone Market.Signaling Strategies: Reputation Effect.Legal Elements-Efficiencies Justification.Scheme of Predation and Supporting Evidence.The Tension Between Current Legal Views and Modern Economic Theory.We thank LeeAnne Baker, Jeremy Bartell, Gretchen Elizabeth Joyce and Chad Porter for dedicated and resourceful research assistance. We have also received insightful comments from many individuals, including Lucien Bebchuk, Mathias Dewatripont, Einer Elhauge, Vic Khanna, Louis Kaplow, Alvin Klevorick, Barry Nalebuff, Jim Meeks, Patrick Rey, Alan Schwartz, Marius Schwartz, Dan Vincent, and Bobby Willig. School of Management, New Zealand Institute for Antitrust Law and Economics, Princeton University, and Tilburg University Centre for Economic Research.
of Justice, European Centre for Advanced Research in Economics (ECARE), European Summer Symposium in Economic Theory at Gerzensee, N.Y.U. We have received valuable comments from legal workshop participants at Boston University Law School, Harvard Law School, Yale Law School and from economic workshop participants at the Antitrust Division, U.S. *** Professor of Economics, Columbia University ** Professor and Kenison Distinguished Scholar of Law, Boston University Scully ’66 Professor of Finance and Economics, Princeton University STRATEGIC THEORY AND LEGAL POLICY Patrick Bolton, * Joseph F. For an official signed copy, please contact the Antitrust Documents Group.
EXAMPLE OF PREDATORY PRICING STRATEGY PDF
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