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Problem 30

If you were developing a product (like a web brow…

05:26
Problem 29

Can you think of any examples of successful predatory pricing in the real world?

Answer

Antitrust laws are the laws and regulations that are imposed by government or authorities to
ensure the increased competitiveness in the market. It also helps observe and control mergers
and acquisition taking place between big or key firms.
Antitrust laws are the laws and regulations that are imposed by government or authorities to
ensure the increased competitiveness in the market. It also helps observe and control mergers
and acquisition taking place between big or key firms.


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Video Transcript

It's hard to think of real world examples for predatory pricing for the same reasons that it is hard to know whether the firm is actually practicing predatory pricing. But we can imagine that this happens with restaurants. For example, it see that you're the only Italian restaurant and, uh, particularly small radius Ah, very simply in the neighborhood and theories and love it. Er, rest around the wants to open another Italian restaurant. Well, what this restaurant might do is cut down their prices off their Thurman. You right? You really know where the cost of your menu in the center of eyes the other restaurant from opening up or caught your pies is long enough so that the other firm economic a profit and choose to leave this neighborhood, Um, but again pinpointing predatory pricing in the real world. It's really hard, and it's really hard to tell whether you're decreasing prices out of predatory pricing behavior or if you're just reacting to know the restaurant opening and just lower in your prices to be closer to the average variable costs, which we do expect in the presence of competition

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