Predatory Pricing and Trading

Predatory pricing is an anticompetitive measure employed by a dominant company to protect market share from new or existing competitors. It generally involves temporarily pricing a product low enough to end a competitive threat. Thus, the two major parameters under consideration are costs and the intent of the firm. Costs are usually easy to define, yet there is a debate on the appropriate ones to use. Intent, on the other hand, is easier to comprehend, yet most difficult to prove. This entry introduces the concept of predatory pricing, its history, and arguments both for and against the practice of predatory pricing.