Predatory accommodation: Below-cost pricing without exclusion in intermediate goods markets

Shaffer, Greg and Marx, Leslie M. (1999) Predatory accommodation: Below-cost pricing without exclusion in intermediate goods markets. Rand Journal of Economics, 30 (1). pp. 22-43. ISSN 1756-2171

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Abstract

We show that below-cost pricing can arise in intermediate goods markets when a monopolist retailer negotiates sequentially with two suppliers of substitute products. Below-cost pricing by one supplier allows the retailer to extract rents from the second supplier. Thus, the retailer and one supplier can increase their joint profit at the expense of the second supplier. We consider the welfare implications of below-cost pricing (welfare can increase or decrease as a result of below-cost pricing) and provide suggestions for when the courts should view below-cost pricing in intermediate goods markets as anticompetitive and when they should not.

Item Type: Article
Faculty \ School: Faculty of Social Sciences > Norwich Business School
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Depositing User: Nicola Secker
Date Deposited: 01 Apr 2011 07:58
Last Modified: 21 Apr 2020 21:23
URI: https://ueaeprints.uea.ac.uk/id/eprint/27847
DOI:

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