Kellogg on Marketing by Tybout Alice Calder Bobby J

Author:Tybout, Alice, Calder, Bobby J.
Language: eng
Format: epub
ISBN: 9780470877630
Publisher: Wiley

Predatory Pricing Long-term aggressive pricing that is below marginal cost (or its measurable surrogate, average variable cost) and is aimed at driving rivals out of business can be attacked as “predatory pricing” under Section 2 of the Sherman Act and other antitrust statutes. However, in 1993 the Supreme Court made it clear that a violation also requires that the structure of the market be such to permit the supplier to recoup its losses, an element which severely limits the applicability of the law. In 2007, the Supreme Court established a similarly high standard for “predatory buying,” in other words, the process of overpaying for inputs to force competitors out.

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