The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Predatory Pricing

  • Janusz A. Ordover
Reference work entry


Predatory pricing is a response to a rival that sacrifices part of the profit that could be earned under competitive circumstances were the rival to remain viable, in order to lessen competition and gain consequent monopoly profit. The presence of intertemporal cost and/or demand linkages as well as network effects complicates the formulation of pricing rules that would distinguish legitimate from exclusionary pricing behaviour, and suggests that standard (non-strategic)  models of markets do not necessarily offer much help in gauging the rationality of predation.


Above-cost pricing Antitrust policies Barriers to entry Chain-store paradox Entry Exit Incomplete information Increasing returns Intertemporal scope economies Marginal and average cost pricing Natural monopoly Network goods Predatory pricing Returns to scale Standardization Two-sided platforms 


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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Janusz A. Ordover
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