![]() ![]() 4 Theories for controlling predatory pricing.Predatory pricing usually causes consumer harm and is considered anti-competitive in many jurisdictions making the practice illegal under some competition laws. With there being less firms in the market causing consumers to have fewer choices between products or services, these higher prices result in consumer harm. The difference between predatory pricing and competitive pricing is during the recouping phase of lost profits by the dominant firm charging higher prices. Once competition has been eliminated, the dominant firm now having a majority share of the market can raise its prices to monopoly levels in the long-term to recoup its losses. ![]() ![]() The aim is that existing or potential competitors within the industry will be forced to leave the market, as they are unable to effectively compete with the dominant firm without making a loss. Predatory pricing is a pricing strategy, using the method of undercutting on a larger scale, where a dominant firm in an industry will deliberately reduce the prices of a product or service to loss-making levels in the short-term. ![]()
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