If several firms decide together to set the market price below their costs for the short term to drive competitors out of business, what are they participating in?

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Julien

14 December, 07:14

If several firms decide together to set the market price below their costs for the short term to drive competitors out of business, what are they participating in?

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Nadia Norris · Answer 1

Predatory pricing

Predatory pricing is illegal under US anti-trust laws, because it is a way for firms or companies to seek a monopoly of control of a market. The Federal Trade Commission investigates such claims, but the evidence must be clear of a true collusion to run other competitors out of business. If I run sales or coupons at my store that you are unable to match in your store, that doesn't mean I'm automatically guilty of predatory pricing. Or if all the main stores in town, perhaps because of the volume of their sales, can offer prices below what you can offer at your independent business, that also may not be a sign of predatory pricing.