We propose a simple theory of predatory pricing, based on scale economies and sequential buyers (or markets). The entrant (or prey) needs to reach a critical scale to be successful. The incumbent (or predator) is ready to make losses on earlier buyers so as to deprive the prey of the scale it...

The canonical bargaining game in economics is the ultimatum game, played by tens of thousands of students around the world over the past three decades. In the ultimatum game, first studied by Werner Guth, Rolf Schmittberger, and Bernd Schwarze (1982), the “proposer” proposes how to split a...