ECONOMIC RATIONALITY AND THE AREEDA-TURNER RULE

William S Comanor and Harry Frech

University of California at Santa Barbara, Economics Working Paper Series from Department of Economics, UC Santa Barbara

Abstract: The Areeda-Turner rule in U.S. antitrust jurisprudence limits successful predatory pricing cases to circumstances where prices can be shown to have been set below marginal costs. While not cast so, the rule reflects the view that predatory pricing is rarely attempted; and even where attempted is rarely successful; and even where attempted and successful, is difficult to identify. In this paper, we examine the theoretical and empirical foundations of this rule, and conclude that it is time to demote the Areeda-Turner analysis from the status of a rule to that of a potentially useful form of inquiry in predatory pricing litigation, but one which is neither necessary nor dispositive.

Keywords: Social and Behavioral Sciences; Predatory Pricing; Antitrust; Monopolization; Areeda-Turner Rule; Credibility; Subgame Perfection; Rationality; Chain-Store Paradox (search for similar items in EconPapers)
Date: 2015-03-06
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Economic Rationality and the Areeda–Turner Rule (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:ucsbec:qt7vq8v499

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