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top   »  economics   »  price economics   »  predatory pricing

What is Predatory Pricing?

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Predatory pricing is a price strategy that attempts to put competitors out of business by offering a low price, often below cost. When the competition is forced out of the market, prices are increased dramatically. Predatory pricing is often aimed at achieving a monopoly. It is considered anti-competitive behavior that is illegal in many countries. Predatory pricing is also a major issue in international trade as subsidies can often be viewed as a form of state sponsored predatory pricing.
Overview: Predatory Pricing
Area
Economics
Definition
Setting prices low, often below your costs, in an attempt to put your competitors out of business to capture market share or establish a monopoly position.
Example
Government subsidies or policies that give local industry a cost advantage that wipes out the competition in other countries.
Related Concepts
Deadweight Loss

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