Talk:Predatory pricing

the "criticism/opposition" section doesn't address the issues of the "support" side completely. What I mean is: Once the prices are raised (after competitors leave), there is a strong incentive for competition to reimerge.

Errr, barriers to entry is kind of the whole point here.

bluemoon thanks for restoring my material, I agree there is some duplication. The existing organization was odd with a very brief statement of what it is following by "criticism for the theory" then "support for the theory" I'll try to work on it some more. JE

This clause in the first paragraph is overstated and unncecessary: "eventually driving them bankrupt" - it is not essential that the competitor be driven to bankruptcy; it is sufficient if the competitor is driven from the market (for example out of the U.S. or out of Texas, or out of the hair spray business). I am editing this accordingly. JE

The whole thing seems (1) poorly explained in parts, and (2) slanted to the view that "predatory pricing" is so bad that it must not be allowed although it's never actually happened anywhere!

Note that point #2 contradicts itself. --Uncle Ed 19:19, 24 July 2006 (UTC)[reply]

Badness is nothing to do with now often it happens, it is however so bad that it is illegal just about everywhere, I think that this much more important. Also, I couldn't imediately see where it says it has never happened, but certainly I have studied case studies of this practice, and I can tell you it has happened. Martin 19:38, 24 July 2006 (UTC)[reply]

I'm not saying I agree or disagree with the POV. Contrary to rumors, I do not spend my whole day pushing my POV! ;) Read the last 2 sentences of the article:

By pricing aggressively to start with, even pricing below cost, firms can ensure a base of customers in the future from whom to make a profit.

However, to date, no empirical example has yet been demonstrated of successful predatory pricing practice by a corporation.

Can we fix this? --Uncle Ed 20:04, 24 July 2006 (UTC)[reply]

To start with I have removed that last sentence. The rest looks largely good to me, though a controversial topic like this needs to be heavily referenced. Martin 09:51, 25 July 2006 (UTC)[reply]

As an example of predatory pricing, look at how wal-mart sells at a loss in order to drive competing stores in the vicinity out of business, then raises prices.

But the above sentence has never actually been shown to have happened in any academic study. Sure, Wal-mart drives competing stores in the vicinity out of business. But has Walmart ever been shown to have done so while operating at a loss? Has Walmart then been shown to then raise prices afterwards? This has never been demonstrated empirically, despite tremendous research within the academic community. If somebody can actually cite a paper where this has actually been shown to happen (not just theorized to possibly occur, but to actually have happened), by all means, please present it. Sakhalinrf 07:03, 31 August 2007 (UTC)[reply]

You are absolutely right. So far nobody has actually come up with an example where the predatory pricing strategy has worked in the real world. --Jayson Virissimo (talk) 01:23, 2 April 2008 (UTC)[reply]

Contradiction Tag

Does this need to remain? I fail to see the contradiction. If it's the issue identified by "Uncle Ed" I think it's been addressed, hasn't it? Psychobabble 01:53, 21 August 2006 (UTC)[reply]

No one's replied for a cpl of weeks so I'm removing. Psychobabble 06:40, 7 September 2006 (UTC)[reply]

Example is Wrong

"# Netscape had been selling their web browser for approximately $30 retail. A new competitor called Microsoft entered the market by introducing Internet Explorer at $0 retail, thus selling the software below development cost. This action quickly drove Netscape's browser market share to almost-zero, and the company was forced to liquidate to AOL. Hence Microsoft used predatory pricing (selling below cost) to drive out a competitor. This action eventually brought the scrutiny of the U.S. Justice Department in an anti-trust case.[citation needed]"

This isn't actually an example of predatory pricing. For it to be predatory pricing Microsoft would have had to increase prices once Netscape went out of business and achieved super-normal profits. As far as I can tell Internet Explorer is still $0 even though Netscape is gone. Any comments? Maybe we should list them as "alleged instances of predatory pricing" instead of "examples".--Jayson Virissimo (talk) 01:26, 2 April 2008 (UTC)[reply]

Actually, MS says it doesn't distribute IE anymore, period. IE was ultimately “integrated” into Windows, representing the fact that MS's goal was not to control the browser market, but to prevent challengers in the OS market (which is exactly what Netscape was planning to enter next.) Destroying Navigator was merely a means to an end. 76.126.134.152 (talk) 07:04, 6 May 2008 (UTC)[reply]