Sometimes a firm or an individual deliberately sets prices to incur losses for a long time, either to eliminate a competitor, or to inhibit competition in the expectation that the firm or individual will be able to recoup its losses later by charging prices above competitive levels. According to the textbook, what is the term for this?
A) price fixing
B) bid rigging
C) price discrimination
D) predatory pricing

Question

Quizplus · Accepted Answer

This practice is known as predatory pricing, where a company temporarily lowers its prices to drive competitors out of the market, and then raises prices once it has a monopoly or dominant position in the market.

Sometimes a Firm or an Individual Deliberately Sets Prices to Incur