Fumagalli, Chiara; Motta, Massimo - 2010
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 needs, thus making monopoly profits on later buyers. Several …