predatory pricing

business practice

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Last updated

July 21, 2026

Quick Summary

Predatory pricing is a business practice where a company intentionally sets prices very low, often below cost, to eliminate competition. This strategy aims to drive smaller competitors out of the market by absorbing short-term losses. Once competitors are gone, the company can then raise prices to recoup losses and potentially establish a monopoly.1

The Robinson-Patman Act in the U.S. was enacted to prevent such price discrimination and protect small businesses. However, proving predatory pricing and price discrimination can be difficult, and the law is complex to enforce. Price-fixing, an agreement between competitors to set prices, is also illegal under antitrust laws in many countries, including the U.S. and the European Union.12

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barriers to entry
…established firms may participate in predatory pricing by deliberately lowering their prices to prevent new entrants from making a profit. Artificial barriers also arise when a certain industry is protected by government regulations, licenses, or patents.
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…established firms may participate in predatory pricing by deliberately lowering their prices to prevent new entrants from making a profit. Artificial barriers also arise when a certain industry is protected by government regulations, licenses, or patents.
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Miller-Tydings Act of 1937
…economy, need protection from the predatory pricing practices of ruinous competition. Similarly, some economists and jurists opposed fair-trade laws on the grounds that such laws significantly reduce or even eliminate competition (specifically, small competitors) from the marketplace. Pres. Franklin D. Roosevelt strongly objected to fair-trade provisions on the grounds of…
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…economy, need protection from the predatory pricing practices of ruinous competition. Similarly, some economists and jurists opposed fair-trade laws on the grounds that such laws significantly reduce or even eliminate competition (specifically, small competitors) from the marketplace. Pres. Franklin D. Roosevelt strongly objected to fair-trade provisions on the grounds of…
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Robinson-Patman Act
…practice is referred to as predatory pricing. The megastore absorbs short-term losses as a necessary function of driving out its local competitors. The outcomes are twofold. First, area competitors are eliminated, thus securing the megastore’s profit margin. Second, once the newcomer has increased its market power, prices are set at…
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…practice is referred to as predatory pricing. The megastore absorbs short-term losses as a necessary function of driving out its local competitors. The outcomes are twofold. First, area competitors are eliminated, thus securing the megastore’s profit margin. Second, once the newcomer has increased its market power, prices are set at…
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Lina Khan
…form of aggressive loss-leading (predatory pricing) to cripple other retailers, and its integrated diversification enabled it to leverage its structural power to gain advantage over its competitors. According to Khan, Amazon used data from the transactions of third-party sellers to identify profitable product lines that it could sell at…
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…form of aggressive loss-leading (predatory pricing) to cripple other retailers, and its integrated diversification enabled it to leverage its structural power to gain advantage over its competitors. According to Khan, Amazon used data from the transactions of third-party sellers to identify profitable product lines that it could sell at…
Read More