Talk:Predatory pricing/Archives/2011

criticism/opposition/support

the "criticism/opposition" section doesn't address the issues of the "support" side completely. What I mean is: Once the prices are raised (after competitors leave), there is a strong incentive for competition to reimerge.

Errr, barriers to entry is kind of the whole point here.

bluemoon thanks for restoring my material, I agree there is some duplication. The existing organization was odd with a very brief statement of what it is following by "criticism for the theory" then "support for the theory" I'll try to work on it some more. JE

This clause in the first paragraph is overstated and unncecessary: "eventually driving them bankrupt" - it is not essential that the competitor be driven to bankruptcy; it is sufficient if the competitor is driven from the market (for example out of the U.S. or out of Texas, or out of the hair spray business). I am editing this accordingly. JE

The whole thing seems (1) poorly explained in parts, and (2) slanted to the view that "predatory pricing" is so bad that it must not be allowed although it's never actually happened anywhere!

Note that point #2 contradicts itself. --Uncle Ed 19:19, 24 July 2006 (UTC)

Badness is nothing to do with now often it happens, it is however so bad that it is illegal just about everywhere, I think that this much more important. Also, I couldn't imediately see where it says it has never happened, but certainly I have studied case studies of this practice, and I can tell you it has happened. Martin 19:38, 24 July 2006 (UTC)

I'm not saying I agree or disagree with the POV. Contrary to rumors, I do not spend my whole day pushing my POV! ;) Read the last 2 sentences of the article:

• By pricing aggressively to start with, even pricing below cost, firms can ensure a base of customers in the future from whom to make a profit.

• However, to date, no empirical example has yet been demonstrated of successful predatory pricing practice by a corporation.

Can we fix this? --Uncle Ed 20:04, 24 July 2006 (UTC)

To start with I have removed that last sentence. The rest looks largely good to me, though a controversial topic like this needs to be heavily referenced. Martin 09:51, 25 July 2006 (UTC)

This article is ridiculous. Referring to the proven practice as “hypothetical” is worse than slanted, it is a lie.

I have engaged in predatory pricing on many occasions. I open a new gas station in a small market and drive out the mom and pops. I set my gas prices at-cost temporarily and make up the money inside the store or from one of my other stores. After my small competitors close I raise my prices to the going rate or my cost if the margins are tight (whichever is higher). I actually ask our vendors what my competitors sell in volume and then I can gauge what to sell cheaply to hurt as much cash flow for them as I can, while doing the least damage to myself. Once the small players are out I have a de facto monopoly or oligopoly.

At the same time, I could beat my big competitors on price too but do not attempt to because they are owned by major oil and could squash me like a bug with the huge money they make from refining margins. I tried to undercut them a few times but they always get incentive money from the refiner to match my prices so I gave up. If a law were passed that forbid them from subsidizing their prices then I would lower mine and take a lot of their customers. —Preceding unsigned comment added by 67.249.11.41 (talk) 20:27, 15 April 2011 (UTC)

wal-mart example

As an example of predatory pricing, look at how wal-mart sells at a loss in order to drive competing stores in the vicinity out of business, then raises prices.

But the above sentence has never actually been shown to have happened in any academic study. Sure, Wal-mart drives competing stores in the vicinity out of business. But has Walmart ever been shown to have done so while operating at a loss? Has Walmart then been shown to then raise prices afterwards? This has never been demonstrated empirically, despite tremendous research within the academic community. If somebody can actually cite a paper where this has actually been shown to happen (not just theorized to possibly occur, but to actually have happened), by all means, please present it. Sakhalinrf 07:03, 31 August 2007 (UTC)

You are absolutely right. So far nobody has actually come up with an example where the predatory pricing strategy has worked in the real world. --Jayson Virissimo (talk) 01:23, 2 April 2008 (UTC)

The case of Amazon offering free shipping was not violating predatory pricing laws, but book prices regulations. Books in France are not under a free-pricing system but heavily regulated (since the mid-90s to protect independant bookstores...). Unfortunately I can't produce any articles in english about this. —Preceding unsigned comment added by 91.171.186.166 (talk) 12:23, 17 June 2009 (UTC)

Contradiction Tag

Does this need to remain? I fail to see the contradiction. If it's the issue identified by "Uncle Ed" I think it's been addressed, hasn't it? Psychobabble 01:53, 21 August 2006 (UTC)

No one's replied for a cpl of weeks so I'm removing. Psychobabble 06:40, 7 September 2006 (UTC)

Example is Wrong

"# Netscape had been selling their web browser for approximately $30 retail. A new competitor called Microsoft entered the market by introducing Internet Explorer at $0 retail, thus selling the software below development cost. This action quickly drove Netscape's browser market share to almost-zero, and the company was forced to liquidate to AOL. Hence Microsoft used predatory pricing (selling below cost) to drive out a competitor. This action eventually brought the scrutiny of the U.S. Justice Department in an anti-trust case.[citation needed]"

This isn't actually an example of predatory pricing. For it to be predatory pricing Microsoft would have had to increase prices once Netscape went out of business and achieved super-normal profits. As far as I can tell Internet Explorer is still $0 even though Netscape is gone. Any comments? Maybe we should list them as "alleged instances of predatory pricing" instead of "examples".--Jayson Virissimo (talk) 01:26, 2 April 2008 (UTC)

Actually, MS says it doesn't distribute IE anymore, period. IE was ultimately “integrated” into Windows, representing the fact that MS's goal was not to control the browser market, but to prevent challengers in the OS market (which is exactly what Netscape was planning to enter next.) Destroying Navigator was merely a means to an end. 76.126.134.152 (talk) 07:04, 6 May 2008 (UTC)

Shopper dockets

What are they? I guess it is an australian term. I don't know it. Sokme kind of voucher, rain check, I guess.

Is there some way we could explain it? The article is prety well written, I don't want to have to break this out I don't know the best way to edit them. —Preceding unsigned comment added by SimonTrew (talk • contribs) 04:47, 12 February 2009 (UTC)

Cleanup

Since nobody actually seems to be discussing this article I went ahead and cleaned it up.

SimonTrew (talk) 16:15, 16 March 2009 (UTC)

Price/Margin Squeeze

Hi there, shouldn't there be some discussion around the economic and legal tests to determine whether pricing is predatory. As I understand these are referred to as "price squeeze" or margin squeeze" tests? Also possibly the "efficient rivals" test? Or am I barking up the wrong tree here?

e.g. I found this definition of "price squeeze": "A reduction in prices of services to the end user from the incumbent that causes a loss of market share to efficient competitors unable to sustain the reduction and is the result of a price unreasonably low for the costs that should be attributed to the service." This is in relation to telecommunications I think.

Amilnerwhite (talk) 23:00, 2 June 2009 (UTC)

Disgustingly censored article!

The article makes zero mention of the Sir Freddy Laker Airlines case, a nasty 16 year long saga in the transatlantic commercial flight business, which single-handedly proves that predatory pricing exists and works and allows the big bad corporates to destroy the little guy. Wikipedia demolishes its reputation whenever such obvious, blatant censorship takes place! 87.97.106.3 (talk) 20:19, 19 July 2009 (UTC)

Censorship?? slow down there! Feel free to be bold and add to the article. Just make sure you use verifiable references to back up all warranted claims. PStrait (talk) 02:26, 20 July 2009 (UTC)

I am sure there are examples regarding local markets in small cities and Walmart aswell.82.171.225.84 (talk) 12:57, 1 December 2011 (UTC)

Canadian Competition Act §50 repealed

According to Canadian Dept. of Justice online acts this section was repealed in 2009. The article is therefore out-of-date and should be updated. BrionSwanson (talk) 19:55, 29 July 2009 (UTC)

destroyer pricing

I hadn't heard this term outside of Wikipedia, and searches don't turn up much for it-I didn't see anything in what I'd consider a reliable source. So I'm pulling the "also known as destroyer pricing" out. CRETOG8(t/c) 12:39, 22 October 2009 (UTC)

China and Rare-Earth Metals

I would think that the tactics of China would qualify as Predatory Pricing: They sold refined rare-earth metals at such a low cost it put the competition out of business, and now they're raising the prices because they control the market. Does anyone disagree? [1] RealmRPGer (talk) 18:47, 20 May 2011 (UTC)