Example of predatory pricing strategy8/28/2023 Judicial enforcement is at a low level, following the Supreme Court’s recent Brooke decision, the first major predatory pricing decision in modern times. The dilemma is intensified by recent legal and economic developments. On the one hand, history and economic theory teach that predatory pricing can be an instrument of abuse, but on the other side, price reductions are the hallmark of competition, and the tangible benefit that consumers perhaps most desire from the economic system. Predatory pricing poses a dilemma that has perplexed and intrigued the antitrust community for many years. Cost Signaling Combined with Reputation Effect: Theory.Illustration: Bogus Competition in the Tobacco Industry.Acquisition of Prey’s Assets by Successor Firm.Possible Objections and Counter Strategies.Illustration: Entry into Eastern Coffee Market.Demand Signaling: Test-Market and Signal Jamming.Cost Signaling, Demand Signaling and Other Predatory Strategies.
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