Predatory pricing has long been a contentious issue among lawmakers and economists. Legal actions are continually brought against companies. But the question remains: how likely are firms to cut prices in order to drive rivals out of business? Predatory firms risk having to keep prices below cost for such an extended period that it would become cost-prohibitive. Recently, economists have turned to game theory to examine circumstances under which predatory tactics could be profitable. John R. Lott, Jr. provides empirical analysis in this book. By examining firms accused of or convicted of predation over a 30-year period of time, he shows that these firms are not organized as the game-theoretic or other models of predation would predict. In contrast, what evidence exists for predation suggests that government enterprises are more of a threat. Lott presents data and analysis, attacking an issue of major legal and economic importance.
Preface 1. The Debate on Predation 2. Reputational Models of Predation: Testing the Assumptions 3. Nonprofit Objectives and Credible Commitments: What Does This Imply for Government Enterprises? 4. Are Government or Private Enterprises More Likely to Engage in Predatory Behavior? Some International Evidence 5. What Happens When the Victims Have Better Information Than the Predators? 6. Some Final Thoughts Appendixes A. Explaining the Framework Used to Evaluate the Legitimacy of Anti-dumping Cases B. Data Appendix C. Analyzing How the Profitability of Entry Deterrence Is Affected by the Possibility of Trading Profits Notes References Index