A firm that engages in predatory pricing benefits from
A)having deeper pockets than its prey.
B)building a reputation for taking tough actions to drive a competitor out of the market.
C)having its prey stockpile its product.
D)having deeper pockets than its prey and building a reputation for taking tough actions to drive a competitor out of the market.

Question

Quizplus · Accepted Answer

Predatory pricing involves setting prices lower than the competition to drive them out of business. The firm engaging in predatory pricing benefits from having deeper pockets than its prey, as they can sustain losses for a longer period of time. They also benefit from building a reputation for taking tough actions to drive a competitor out of the market, which can deter new competitors from entering the market in the future. Additionally, if the prey stockpiles its product, it can lead to higher costs and inefficiencies for the prey, making it more difficult for them to compete.

A Firm That Engages in Predatory Pricing Benefits from