The current state of the law and economics of predatory pricing
Article Abstract:
Economists and legal scholars engaged in a lengthy debate after Phillip Areeda and Donald F. Turner published their theory about predatory pricing and antitrust policy in 1975. The most controversial part of the theory was the Areeda-Turner (AT) test, which stated that the appropriate standard of lawful price was short-run marginal cost and suggested reasonably anticipated average variable cost as a substitute. The use of price to affect entry and exit does not require prices that do not pass the AT test in models depicting predation as an equilibrium phenomenon.
Publication Name: American Economic Review
Subject: Economics
ISSN: 0002-8282
Year: 1993
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The black hole of graft: the predatory state and the informal economy
Article Abstract:
Countries with weak democratic institutions often have economies which are systematically robbed by a predatory oligarchy. In these countries, businesses secede into the informal sector to escape the taxes imposed by the predator state. Predator states, however, can optimize graft by providing less public order which is a public good. It was suggested that secession into the informal economy can be minimized through democratic processes in the provision of public goods and the organization of tax structures.
Publication Name: American Economic Review
Subject: Economics
ISSN: 0002-8282
Year: 1995
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The learning curve, predation, antitrust, and welfare
Article Abstract:
A dynamic model of duopoly competition with learning curves is used in evaluating an economic definition of predation. The results showed that predation takes place in equilibrium, although below-cost pricing is not a sufficient indicator of predation. A prohibition of predation can be helpful or harmful to consumer welfare depending on market structure as shown by a conceptual framework for antitrust analysis of predation. An effective law against predation is possible but it faces formidable odds.
Publication Name: Journal of Industrial Economics
Subject: Economics
ISSN: 0022-1821
Year: 1997
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