Investopedia

Continue to Site »

Predatory Pricing

Filed Under » , , ,
Dictionary Says

Definition of '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.
Investopedia Says

Investopedia explains 'Predatory Pricing'

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.

Articles Of Interest

  1.

    Introduction To Technical Analysis Price Patterns

    To "find your game" in technical analysis, you need to be able to recognize reversals and continuations as they form.

  2. A History Of U.S. Monopolies

    These monoliths helped develop the economy and infrastructure at the expense of competition.

  3. MACD Histogram Helps Determine Trend Changes

    Learn how this momentum indicator is used to determine price action on a stock.

  4. Antitrust Defined

    Check out the history and reasons behind antitrust laws, as well as the arguments over them.

  5. Does perfect competition exist in the real world?

    First, let's review what economic factors must be present in an industry with perfect competition: 1. All firms sell an identical product. 2. All firms are price-takers. 3. All firms have a ...

  6. Economics Basics

    Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more!

  7. 7 Unconventional Ways Businesses Can Borrow Money

    Find out how your business can get the money it needs - even when the bank says "no".

  8. Leading Economic Indicators Predict Market Trends

    Leading indicators help investors to predict and react to where the market is headed.

  9. Should You Head Back To Business School?

    Find out if an MBA is necessary for you to reach your professional goals.

  10. Women And Finances: Is There A Gender Bias?

    Uncover some very complex reasons for female gender biases in the finance world.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  2. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  3. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  4. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  5. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  6. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.
Trading Center