Difference between revisions of "Predatory pricing"
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For example, Microsoft initially gave away its Internet Explorer for free and destroyed the browser leader, Netscape. However, the illegality of predatory pricing can be difficult to prove. | For example, Microsoft initially gave away its Internet Explorer for free and destroyed the browser leader, Netscape. However, the illegality of predatory pricing can be difficult to prove. | ||
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| + | [[Libertarian]] thinking is that, since the free market leads to efficiencies and hence to lower prices and benefits to consumers, predatory pricing is not a major issue. | ||
Revision as of 18:49, February 23, 2007
Predatory pricing is when a company sells a product at a very low price, lower than its cost, in order to drive away the competition and enable the company to take advantage of greater market power in the future. This is illegal under the antitrust laws.
For example, Microsoft initially gave away its Internet Explorer for free and destroyed the browser leader, Netscape. However, the illegality of predatory pricing can be difficult to prove.
Libertarian thinking is that, since the free market leads to efficiencies and hence to lower prices and benefits to consumers, predatory pricing is not a major issue.
