The more economic approach to predatory pricing

Michael Funk and Christian Jaag

No 57, Working Papers from Swiss Economics

Abstract: The ?more economic approach? was introduced to antitrust in order to achieve a more effect-based and theoretically grounded enforcement. However, related to predatory pricing it resulted in systematic over- and under-enforcement: Economic theory does not require dominance for pre-dation to be a rational (and harmful) strategy while an ex ante dominant firm would often refrain from predation. Hence, within the current legal framework, a more effect-based and theoretically grounded antitrust en-forcement with respect to predatory pricing will result in systematic over- and under-enforcement. Therefore, we suggest separating predatory pric-ing from exclusionary abuse of a dominant firm, both legally and analyti-cally. Instead, predatory pricing should be analyzed along the same logic as a merger. In particular, we argue that three elements from merger con-trol should be adopted: in absence of dominance, market share and/or turnover thresholds may serve as a de minimis rule; recoupment should be analyzed similarly to the competitive effect of a merger between the predator and its prey; and a stronger efficiency defense should be estab-lished.

Keywords: Predatory pricing; competition policy; antitrust; more economic approach; predation (search for similar items in EconPapers)
JEL-codes: L11 L41 (search for similar items in EconPapers)
Date: 2016-12
New Economics Papers: this item is included in nep-com, nep-ind and nep-law
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http://www.swiss-economics.ch/RePEc/files/0057FunkJaag.pdf

Related works:
Journal Article: THE MORE ECONOMIC APPROACH TO PREDATORY PRICING (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:chc:wpaper:0057

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