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The welfare economics of successful predatory pricing is complicated, because consumers benefit in the short run from the low prices, then lose out in the long run if the predator is able to reestablish monopoly prices. Discuss the possible welfare effects of predatory pricing in the following cases:

(a) The case against American Airlines outlined in the chapter opener.

(b) A case involving a network industry. For example, the government's case against Microsoft alleges that the company priced its web browser at zero as a predatory strategy designed to eliminate its only rival, Netscape.

(c) A case involving learning economies.

Microeconomics, Economics

  • Category:- Microeconomics
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