Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics

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Predatory Pricing:Interplay between Law and Economics


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1 Khare Legal Chambers LLP, 407, Level 4, EMCA House, 289, Shahid Bhagat Singh Marg, Ballard Estate, Mumbai 400001, Maharashtra, India
     

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Antitrust regulation is a domain where law and economics interact whereby economics assists in implementation of the law. Various economic theories have been developed to substantiate the need and the basis of antitrust regulation. This paper focuses on predatory pricing as an antitrust violation. When an undertaking has priced its product below cost so as to eliminate competitors, then it is guilty of predatory pricing. The traditional theory of predatory pricing was considered flawed and, therefore, economists developed detailed strategic theories. Although not all theories translate into law, they still provide a basis while deciding the cases on antitrust violation. Jurisdictions like that of the US have accepted the importance of economics in implementation of the law and thereby seek assistance from economic experts while deciding the cases. This paper, therefore, attempts to analyze the development of economic theories vis-a- vis law on predatory pricing.
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  • Predatory Pricing:Interplay between Law and Economics

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Authors

Abhishek Khare
Khare Legal Chambers LLP, 407, Level 4, EMCA House, 289, Shahid Bhagat Singh Marg, Ballard Estate, Mumbai 400001, Maharashtra, India

Abstract


Antitrust regulation is a domain where law and economics interact whereby economics assists in implementation of the law. Various economic theories have been developed to substantiate the need and the basis of antitrust regulation. This paper focuses on predatory pricing as an antitrust violation. When an undertaking has priced its product below cost so as to eliminate competitors, then it is guilty of predatory pricing. The traditional theory of predatory pricing was considered flawed and, therefore, economists developed detailed strategic theories. Although not all theories translate into law, they still provide a basis while deciding the cases on antitrust violation. Jurisdictions like that of the US have accepted the importance of economics in implementation of the law and thereby seek assistance from economic experts while deciding the cases. This paper, therefore, attempts to analyze the development of economic theories vis-a- vis law on predatory pricing.

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DOI: https://doi.org/10.21648/arthavij%2F2019%2Fv61%2Fi4%2F191460