Here is the synopsis of our sample research paper on Predatory Pricing. Have the paper e-mailed to you 24/7/365.
Essay / Research Paper Abstract
This 3 page paper explains and discusses what predatory pricing is and why companies use this strategy. The writer comments on how hard this tactic is hard to prove. The paper reports on charges brought against Wal-Mart for predatory pricing. Bibliography lists 4 sources.
Page Count:
3 pages (~225 words per page)
File: MM12_PGpreypr.rtf
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Unformatted sample text from the term paper:
There are other ways besides just the price that can be viewed as predatory, such as bundling different goods together and pricing the bundle below cost or the company will
take other actions that will raise a competitors cost of conducting business (International Encyclopedia of the Social Sciences, 2009). Predatory pricing is extremely difficult to prove. One competitive tactic
that is used often and that is perfectly legal is loss leaders and other promotional activities (ICT Regulation Toolkit, 2009). A loss leader is a price that is very low,
maybe even below cost, intended to bring people into the store with the expectation that customers will purchase other items while they are there. The company does not lose money
with loss leaders although the profit is on other goods purchased. The same is true for promotional pricing. These activities are viewed as aggressive competition (ICT Regulation Toolkit, 2009).
Two tests must be met for predatory pricing to be proven: "Is the firm pricing below cost? And, Whether the firm has an objectively reasonable expectation of being able to
recover the losses it must incur by pricing below cost?" (ICT Regulation Toolkit, 2009). The Areeda-Turner rule says that for predatory pricing to exist, the price must be below the
companys marginal cost (ICT Regulation Toolkit, 2009). But, the short term marginal cost is very hard to measure. Because of this challenge in measuring this statistic, some economists suggest using
the long run incremental cost as the basis for determining predatory pricing (ICT Regulation Toolkit, 2009). This proposition assumes that if two companies are equally efficient, they will have
identical long run incremental costs and if one company prices the good below this long run cost, the other company will not be able to match it without suffering a
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