Strategic Buyers and Market Entry
This paper tests two basic assumptions underlying court made or statutory provisions prohibiting predatory pricing. Such prohibitions are usually based on the economic grounds that monopolistic pricing is likely to occur in the long run, causing harm to competition and consumers. The first assumption under scrutiny is that customers will accept monopolistic prices during the subsequent phase of recoupment, even though they have become accustomed to low prices during the price war. The second assumption is that no competitor will (re-)enter the market in this subsequent phase. Our two experiments indicate that both assumptions are not backed up by actual decision making both of consumers and of competitors. Moreover, we find that consumers use their market power in order to maintain long-run competition.
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Postal: Hauptstr. 90, CH-8280 Kreuzlingen 2|
Phone: +41-71-677 05 10
Fax: +41-71-677 05 11
Web page: http://www.twi-kreuzlingen.ch/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Harrison, Glenn W., 1988. "Predatory pricing in a multiple market experiment : A note," Journal of Economic Behavior & Organization, Elsevier, vol. 9(4), pages 405-417, June.
- Ernst Fehr & Urs Fischbacher, 2004.
"Third-party punishment and social norms,"
- Falk, Armin & Fischbacher, Urs, 2001.
"A Theory of Reciprocity,"
CEPR Discussion Papers
3014, C.E.P.R. Discussion Papers.
- Isaac, R Mark & Smith, Vernon L, 1985. "In Search of Predatory Pricing," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 320-45, April.
- Gomez, Rosario & Goeree, Jacob K., 2008.
"Predatory Pricing: Rare Like a Unicorn?,"
Handbook of Experimental Economics Results,
- Paul Milgrom & John Roberts, 1980.
"Predation, Reputation, and Entry Deterrence,"
427, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2004.
"Two are few and four are many: number effects in experimental oligopolies,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 53(4), pages 435-446, April.
- Steffen Huck & Hans-Theo Normann & Jörg Oechssler, 2001. "Two are Few and Four are Many: Number Effects in Experimental Oligopolies," Bonn Econ Discussion Papers bgse12_2001, University of Bonn, Germany.
- Capra, C. Monica & Goeree, Jacob K. & Gomez, Rosario & Holt, Charles A., 2000. "Predation, asymmetric information and strategic behavior in the classroom: an experimental approach to the teaching of industrial organization," International Journal of Industrial Organization, Elsevier, vol. 18(1), pages 205-225, January.
When requesting a correction, please mention this item's handle: RePEc:twi:respas:0044. See general 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: (Gregor Govtvan)
If references are entirely missing, you can add them using this form.