PREDATORY PRICING AND THE RECONSTITUTED LEMON JUICE INDUSTRY

Abstract

Current antitrust doctrine seemingly accepts average variable cost as one possible boundary between competitive and predatory pricing. Certain authors contend, however, that equally efficient rivals can sometimes be excluded from a market even when a dominant firm prices above its own average variable cost. A model is developed to test for predatory conduct in one such case. This model is applied to the reconstituted lemon juice industry. It shows that under certain conditions, even prices above average variable cost can be exclusionary.

Citation

ROSENBAUM, D.I. (1986), "PREDATORY PRICING AND THE RECONSTITUTED LEMON JUICE INDUSTRY", Studies in Economics and Finance, Vol. 10 No. 1, pp. 3-33. https://doi.org/10.1108/eb028661