In the early 1980s, typical round trip coach fares from the East Coast to London were over $500. Then Freddie Laker introduced a competing service into Newark at $350. Major airlines matched his price-and continued to do so until they drove Laker out of business. Then prices shot back up to over $500. A lawsuit filed under the Sherman Act resulted in the judgment that the major airlines had explicitly tried to destroy a competitor. Laker's experience is an example of:

Question

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Laker's introduction of a lower fare was an example of predatory pricing, where a company sets a very low price to drive out competition and then raises prices once they have achieved the desired goal. The major airlines' subsequent matching of Laker's price was an attempt to eliminate the competition, which was deemed anticompetitive and a violation of the Sherman Antitrust Act. Therefore, the most appropriate option is C) predatory pricing.

In the Early 1980s, Typical Round Trip Coach Fares from the East