Predatory Pricing

The act of setting prices low in an attempt to eliminate the competition. Predatory pricing is illegal under anti-trust laws, as it makes markets more vulnerable to a monopoly. Companies may engage in a variety of activities that intend to drive out competitors, such as create barriers to entry for new competitors or unethical production methods to minimize costs.

A sign of predatory pricing can occur when the price of a product gradually becomes lower, which can happen during a price war. This is difficult to prove because it can be seen as a price competition and not a deliberate act.

In the short term, a price war can be beneficial for consumers because of the lower prices. In the long term, however, it is not beneficial as the company that wins a price war, effectively putting its competitor out of business, will have a monopoly where it can set whatever price it wants.

Investment dictionary. . 2012.

Look at other dictionaries:

  • predatory pricing — predatory pric·ing n: the practice of pricing goods below cost and incurring a loss in order to reduce or eliminate competition ◇ Predatory pricing constitutes an antitrust violation. Merriam Webster’s Dictionary of Law. Merriam Webster. 1996.… …   Law dictionary

  • predatory pricing — noun The setting of prices at a level so low that competitors are forced out of the market • • • Main Entry: ↑predator * * * ˌpredatory ˈpricing 7 [predatory pricing] noun uncountable …   Useful english dictionary

  • predatory pricing — ➔ pricing …   Financial and business terms

  • Predatory pricing — Competition law Basic concepts History of competition law Monopoly Coercive monopoly Natural monopoly …   Wikipedia

  • predatory pricing — N UNCOUNT If a company practises predatory pricing, it charges a much lower price for its products or services than its competitors in order to force them out of the market. [BUSINESS] Predatory pricing by large supermarkets was threatening the… …   English dictionary

  • predatory pricing — As antitrust violation, consists of pricing below appropriate measure of cost for purpose of eliminating competitors in short run and reducing competition in long run. Cargill, Inc., v. Monfort of Colorado, 479 U.S. 104, 117, 107 S.Ct. 484, 493,… …   Black's law dictionary

  • predatory pricing — A sales *pricing policy intended to undercut competitors’ prices. Predatory pricing can be undertaken to achieve any or all of the following objectives: (i) to maintain or increase *market share, (ii) to drive competitors out of a *market, and… …   Auditor's dictionary

  • predatory pricing — noun the pricing of goods or services at such a low level that other firms cannot compete and are forced to leave the market …   English new terms dictionary

  • predatory pricing — noun A strategy of selling a good or service at a very low price so as to drive ones competitors out of business (at which point one can raise ones prices more freely) …   Wiktionary

  • predatory pricing — UK / US noun [uncountable] business the act of setting prices at very low levels in order to force other companies to fail …   English dictionary

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