Predatory pricing requires a dominant supplier to incur a profit sacrifi ce to eliminate a competitor. Prices that imply a sacrifice if applied in the long run (i.e. below long-run average incremental costs) may not imply a sacrifice in the short run (i.e. above average variable costs).

This raises the question whether prices in this range actually imply a profit sacrifice at all. This, in turn, challenges the notion that such prices imply predation in the presence of predatory intent. This is because without profit sacrifice the economic evidence does not corroborate that the dominant firm in fact acted on such intent.

For further information please contact Linda Bertolissio or Riina Rintanen.