The Regulation Of Predatory Pricing In Antitrust Law

This article discusses the regulation of predatory pricing in antitrust law. As a form of abuse of dominant position, predatory pricing is prohibited by antitrust law. Predatory pricing is so similar to normal competition that there is no consensus about whether it should be prohibited or how it should be regulated. This article gives the definition of predatory pricing and test rule.In the part of introduction, I briefly introduce the basic theories of competition, the background of predatory pricing issue, the dilemma of the regulation and the realistic value of the study.In chapter 1, I review the relevant theories of predatory pricing, which focus on the following two questions: (1) should predatory pricing be prohibited by antirust law? and (2) if it should be, then how to be regulated? As the former, Harvard-School holds that predatory should be prohibited because dominant firm is able to monopoly because or entry barriers. On the contrary, Chicago School holds that predatory strategies are irrational and rare, not in concert with the long-term goal of profit-maximizing for a firm. Therefore, the dominant firm has no incentive to monopoly. Furthermore, the predator has little chance to earn profit by predatory strategies, because the effect of such strategies can be diminished by the counterstrategies of prey and consumer. Post Chicago School criticizes the predatory models of Chicago School, which are based upon perfect information and symmetrical information. Post Chicago School holds that predatory strategies are rational on condition that information is asymmetric or the capability of enduring the temporary loss is different. Relatively, the imperfect-information assumption of Post Chicago School is more close to the realistic condition of economic behavior. As the result, their explanation about the incentive and act of firms is more credible. From the classic paper of Areeda and Turner(1975), scholars designed a lot of test rules. There are four schools of academic commentary on predatory pricing, including cost-based school, structural filter school, no rule school...