A simple theory of predation

Arbeitspapier

We propose a simple theory of predatory pricing, based on scale economies and sequential buyers (or markets). The entrant (or prey) needs to reach a critical scale to be successful. The incumbent (or predator) is ready to make losses on earlier buyers so as to deprive the prey of the scale it needs, thus making monopoly profits on later buyers. Several extensions are considered, including markets where scale economies exist because of demand externalities or two-sided market effects, and where markets are characterised by common costs. Conditions under which predation may take place in actual cases are also discussed.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 2010,15

Classification and Topics

• Classification: Wirtschaft ; Antitrust Law ; Monopoly; Monopolization Strategies ; Antitrust Issues and Policies: General
• Subject: Anticompetitive Behaviour ; Exclusion ; Below-Cost Pricing ; Antitrust ; Betriebliche Preispolitik ; Wettbewerbsstrategie ; Kartell ; Skalenertrag ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fumagalli, Chiara ; Motta, Massimo
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/43527
• Last update: 10.03.2025, 11:45 AM CET