Question

Problem 9

Answer 1

Introduction

The unlawful practice of lowering prices in order to remove competition is known as predatory pricing. Antitrust rules are broken when predatory pricing renders markets more prone to monopolies. However, defenders may convincingly argue that cutting rates is part of the natural rivalry, rather than a purposeful effort to undercut the marketplace, making charges of this behavior hard to pursue. Furthermore, due to the challenges in recouping lost income and effectively removing rivals, predatory pricing does not always achieve its purpose.