A Policy to Prevent Rational Test-Market Predation
AbstractThis article models the problem of designing predation policy as one of structuring incentives so that firms choose not to practice predation but to engage in nonpredatory competition. The government decides how intensively to search for possible predatory incidents, how thoroughly to investigate each incident, and how much to penalize convicted predators. We consider test-market "bluffing" predation in which incumbents with high costs can deter entry into a national market by pretending to have low costs. If fines are merely transfers, the optimal fine is the largest one that is feasible. Furthermore, the government should avoid injunctions against "continued predatory pricing."
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 15 (1984)
Issue (Month): 2 (Summer)
Contact details of provider:
Web page: http://www.rje.org
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.