The limit price is just low enough to deter entry.

Question

Quizplus · Accepted Answer

The limit price is set at a level that is just low enough to discourage new market participants from entering the market. This is a common pricing strategy used by established firms to maintain their market share and prevent new competitors from gaining a foothold in the market. By setting a low limit price, the established firm can still maintain its profitability while making it difficult for new entrants to compete effectively.

The Limit Price Is Just Low Enough to Deter Entry