Predatory Pricing

In business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto monopoly, and purportedly could then raise prices above what the market would otherwise bear.

Critics of the concept argue that it is a conspiracy theory, that there are "virtually no... economists" who believe the theory behind the concept (although a few believe it is theoretically possible based on models, there are virtually none who believe it has ever happened), and that there are no known examples of a company raising prices after vanquishing all possible competition.

In many countries predatory pricing is considered anti-competitive and is illegal under competition laws. It is usually difficult to prove that prices dropped because of deliberate predatory pricing rather than legitimate price competition. In any case, competitors may be driven out of the market before the case is ever heard.