Predation and the Logic of the Average Variable Cost Test
AbstractThis article explores principles for execution of the widely accepted Areeda-Turner test of predatory pricing. Defining an Areeda-Turner price as one that does not threaten to exclude any more-efficient supplier, I conclude that (1) any individual price that is not below average avoidable cost cannot be predatory; (2) thus, average avoidable cost, not marginal cost, is crucial in testing predation; (3) sets of prices of different products of the firm can violate the test if the revenues of any combinations of the firm's products fall short of the combined avoidable costs of those products; and (4) a firm's failure to maximize its profits during some relatively brief period is not by itself legitimate evidence of predation. Copyright 1996 by the University of Chicago.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Law & Economics.
Volume (Year): 39 (1996)
Issue (Month): 1 (April)
Contact details of provider:
Web page: http://www.journals.uchicago.edu/JLE/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Colombo, Stefano, 2009.
"On the Effects of Selective Below-Cost Pricing in a Vertical Differentiation Model,"
Economics Discussion Papers
2009-25, Kiel Institute for the World Economy.
- Colombo, Stefano, 2009. "On the effects of selective below-cost pricing in a vertical differentiation model," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 3(33), pages 1-13.
- Aaron S. Edlin & Joseph Farrell, 2004.
"The American Airlines Case: A Chance to Clarify Predation Policy,"
Law and Economics
- Edlin, Aaron S. & Farrell, Joseph, 2002. "The American Airlines Case: A Chance to Clarify Predation Policy," Competition Policy Center, Working Paper Series qt32h8b40m, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Edlin, Aaron S. & Farrell, Joseph, 2002. "The American Airlines Case: A Chance to Clarify Predation Policy," Department of Economics, Working Paper Series qt0wx7c4zf, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Michael Katz, 2002. "Recent Antitrust Enforcement Actions by the U.S. Department of Justice: A Selective Survey of Economic Issues," Review of Industrial Organization, Springer, vol. 21(4), pages 373-397, December.
- Kai Hüschelrath & Jürgen Weigand, 2013. "Predation enforcement options: an evaluation in a Cournot framework," European Journal of Law and Economics, Springer, vol. 35(2), pages 241-272, April.
- Christian Genthon, 2007. "Can we measure Microsoft's market power ?," Post-Print halshs-00153837, HAL.
- Lindsey, Robin & West, Douglas S., 2003. "Predatory pricing in differentiated products retail markets," International Journal of Industrial Organization, Elsevier, vol. 21(4), pages 551-592, April.
- Hern, R., 2001. "Competition and access pricing in the UK water industry," Utilities Policy, Elsevier, vol. 10(3-4), pages 117-127.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division).
If references are entirely missing, you can add them using this form.