Quote:
Originally Posted by DiapDealer
Avoided simply? Oh, you must mean somewhere other than on the internet. 
But I'll bite:
Steve, do you believe retailers who use loss-leader-, basket, or promotional-pricing strategies that result in below-cost prices on certain products in their inventory is being "predatory?" |
I wonder what the FTC has to say?
Quote:
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Can prices ever be "too low?" The short answer is yes, but not very often. Generally, low prices benefit consumers. Consumers are harmed only if below-cost pricing allows a dominant competitor to knock its rivals out of the market and then raise prices to above-market levels for a substantial time. A firm's independent decision to reduce prices to a level below its own costs does not necessarily injure competition, and, in fact, may simply reflect particularly vigorous competition. Instances of a large firm using low prices to drive smaller competitors out of the market in hopes of raising prices after they leave are rare. This strategy can only be successful if the short-run losses from pricing below cost will be made up for by much higher prices over a longer period of time after competitors leave the market. Although the FTC examines claims of predatory pricing carefully, courts, including the Supreme Court, have been skeptical of such claims.
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The reason the FTC and the courts are skeptical about predatory pricing complaints is that predatory pricing is inherently irrational. Companies that try to eliminate their competition by predatory pricing usually bankrupt themselves. Even if they don't bankrupt themselves, it's rare that they recoup their losses. Seeing as there is actually more competition in the e-book market than when Amazon entered it, the chances of the FTC or the courts finding that Amazon had engaged in predatory pricing is roughly zero.