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...

Chaotic behavior of prices can emerge as a robust result from a very simple and standard price adjustment process. Consider the dynamics of prices adjusting according to supply and demand in economies with increasing returns to scale. Increasing returns in production implies the existence of a...