Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 9

What is predatory pricing? Why is it illegal in many jurisdictions?

Step 1 of 3

Predatory pricing:

Monopoly is a market structure where there is only one seller in the market. The monopolistic firms have market power so they are able to generate high profits in long-run as well.

Predatory pricing is a pricing strategy where the pricing is kept so low that it becomes very difficult for other firms to compete and offer goods at similar price to be competitive. Companies go for this strategy to wipe competition and become a monopoly.