Not practicing limit pricing and allowing entry can hurt an incumbent firm's profits.

Name: Not practicing limit pricing and allowing entry can hurt an incumbent firm's profits.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Limit pricing is a strategy where the incumbent firm sets a low price to deter new entrants from entering the market. If the incumbent firm does not practice limit pricing and allows new entrants to enter the market, it can lead to increased competition and potentially lower profits for the incumbent firm.

Not Practicing Limit Pricing and Allowing Entry Can Hurt an Incumbent