Predatory Pricing, And Its Legal Regulation

The competition in marketplace is composed of many kinds of tactics, and the most widespread tactic used by business is price competition.In order to attract consumers and earn more market portions, some enterprises often exclude their opponents form the market by means of selling their products in a much low price, even below the cost. Selling merchandises, without lawful counterargument, in a beneath cost price is so-called Predatory pricing As a kind of severe unfair competition, Predatory pricing not only hurts the benefit of corrivals' and many consumers' in a short time, and even injures the order of market competition from a long-term point of view.In china, predatory pricing is a pretty severe unfair competition. But only two laws, Anti-unfair Competition Act and Price Law, and some municipal rules stipulate predatory pricing. It's extremely difficult to put these clauses into effect because of the shortness of law. The paper analyses the criterion of cost from the respect of economic, and reveals that predatory pricing is irresistible, and depicts the legal system on the basis of economical knowledge and legal theory.The first part of this paper is a general introduction about the concept,the core and the character of predatory pricing. And then compares predatory pricing with some similar concepts, such as dumping,normal discount. Based on these basic concepts, the paper makes a general framework about predatory pricing in the first part.The second part explicates some theories about predatory pricing by means of legal economics. At the beginning, this part reveals that predatory pricing is irresistible under incomplete information circumstance by discussing games theory. Secondly, this part analyses the legal cost what enterprises need to bear. And get one of the reasons why predatory pricing is continual in Chinese market on the basis of two mathematical cost formula. Lastly, the part particularly discusses the national intervention theory, which is the theoretical base of predatory pricing.The third part describes special characters of predatory pricing in Chinese market. This part also makes a conclusion that the average visible cost standard is the most reasonable and suitable criterion to China. In the end of this part, theauthor gives some counterarguments, including four defense causes which Anti-unfair competition Act states.The forth part makes a legislative comparison among China and other countries, and put up some legislative advises in accordance with some legal loopholes in our extant legal system.The last part is to make a simple conclusion and look to the future development. Although legal loopholes exist, Chinese legislators are pursuing the research about predatory pricing. Although the path forward is tough and remote, all the efforts are inspiring.