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Predatory
Pricing
What we'll discuss
-Predatory pricing
-The effects
-Examples
 Competition is always a
good thing. It forces us to do
our best. A monopoly renders
people complacent and
satisfied with mediocrity."
-Nancy Pearcy
Predatory pricing:
Occurs when a company lowers their
price to make it impossible for a
competitor to remain in the market.

A company lowers their price when new

competitors enter the market and raises it
when the competitor exits.
 Insights
-banned in many places as it violates
competition laws.
-difficult to prove/prosecute.

-investment in a future monopoly.

 Effects
A price war spurred by predatory pricing can
be favorable for consumers in the short run. The
heightened competition may create a buyer’s
market in which the consumer enjoys not only
lower prices but also increased leverage and
wider choice.
 ADVANTAGES
-Drives down prices to benefit
consumers and likely to increase
demand for the business.

-May reduce the number of competitors

in the long term and increase monopoly
power of the predator.
Disadvantages
-if proven, it is illegal in many
countries and heavy fines can
be imposed.
-consumers may try to find
alternative products if the
newly created monopolist
increases prices in the long
term.
Thank You
for listening!