http://www.graspingforthewind.com/20...ng-and-amazon/
Quote:
Every article I’ve read on this issue has hinged on accusing Amazon of predatory price fixing. What is that, exactly? The short answer is predatory price fixing is one company with deeper financial reserves and capital, lowering their prices on product or services they sell to below cost, with the intent to outlast their competition. Once the competition has been driven out of business, they can once again raise prices much higher than cost to recoup their losses caused by selling at below cost.
. . .
One, Amazon would need to have market controlling power.
Two, Amazon would need to have a larger reserve of capital than its rivals.
Three, there needs to be solid barriers that prevent new competing businesses from starting up.
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Once competition is driven out and Amazon has 90% of the ebook market and decide to raise prices. What would happen next?
1) DOJ investigation and lawsuit
2) new competitors who would undercut Amazon
For example, if Amazon raised the price to $15 and profit $5 for every sales, Facebook, Apple, Google or a start-up company could price the book at $12 and profit only $2 for every sales.
Amazon: $15 per book
other stores: $12 per book
Customers will go elsewhere.