Predatory Pricing

Predatory Pricing

Predatory pricing refers to the practice by already dominant producers or service providers of cutting prices below cost to force competitors out of the game i.e. to exit and then over time raising prices in a less competitive environment and recouping losses made as a result of the predatory behaviour. Predatory pricing is connected with the practice of dumping. In many advanced economies, predatory pricing is subject to competition law. But over the years this has given rise to significant pushback, given the difficulties of distinguishing between competitive pricing and predatory pricing, and the fact that proscribing predatory pricing by definition leads to higher prices for consumers.

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