When a firm sets its prices below average cost in order to drive out competitors, this is called second degree price discrimination.

Name: When a firm sets its prices below average cost in order to drive out competitors, this is called second degree price discrimination.
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Quizplus · Accepted Answer

This strategy is called predatory pricing, not second degree price discrimination. Second degree price discrimination involves charging different prices based on the quantity consumed or purchased.

When a Firm Sets Its Prices Below Average Cost in Order