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4 Antitrust L. & Econ. Rev. 105 (1970-1971)
The Myth of Predatory Pricing: An Empirical Study

handle is hein.journals/antlervi4 and id is 471 raw text is: THE MYTH OF PREDATORY PRICING: AN EMPIRICAL STUDY DR. ROLAND H. KOLLER II* The Popular Versus the Professional View of Predation The predatory price-cutter is one of the oldest and most familiar villains in our economic folklore. Defined as the financially-power- ful competitor who monopolizes his industry by cutting prices below cost and holding them there until his weaker rivals have gone into bankruptcy, he is a significant figure in the public's perception of economic affairs and undoubtedly exerts a very considerable in- fluence on its attitude toward economic matters in the large, partic- ularly its view of the government's proper role in economic policy. Supporting the layman's view here, popular economic history is filled with the price-cutter's exploits. The economic literature, on the other hand, accords this ubiquitous character no such front-and- center role on the economic stage. Indeed, the standard theoretical analysis in this area treats predation as a form of non-maximizing (irrational) behavior and thus as an unlikely occurrence in the real world.' Given this wide disparity between the popular and the * Dr. Koller is assistant professor of economics at Brigham Young University, Provo, Utah. The instant paper is based on his doctoral disserta- tion, Predatory Pricing in a Market Economy (University of Wisconsin, 1969). ' See, e.g., Morris A. Adelman, Geographical Price Differentials: An Economic Commentary, 48 Illinois Bar Journal (March 1960), p. 514; Robert C. Brooks, Jr., Price Cutting and Monopoly Power, 25 Journal of Marketing (July 1961); Donald Dewey, Competitive Policy and National

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