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34 Antitrust Bull. 869 (1989)
Testing for Predation: Is Recoupment Feasible

handle is hein.journals/antibull34 and id is 883 raw text is: The Antitrust Bulletin/Winter 1989 Testing for predation: is recoupment feasible? BY KENNETH G. ELZINGA and DAVID E. MILLS* I. Introduction The basic idea behind predatory pricing is to discipline or elimi- nate one's rivals in order to maintain or establish monopoly power. This is done by undercutting rivals' prices and imposing losses on them. Eventually rivals expire or surrender price leader- ship to the predator. Inherent in the strategy is the predator sustaining short-run loss in order to impose losses on its prey. This is true whether the predator has a cost advantage or not, Professors of Economics, University of Virginia. AUTHORS' NOTE: The authors would like to thank Eric M. Engen and Jonathan S. Skinner for computational and programming assistance and, for their comments on an earlier version, participants in the Microeconomics Workshop at the University of Virginia, the Economic & Legal Organization Workshop at the University of Chicago, the Federal Trade Commission's Bureau of Economics Seminar, the Anti- trust Division's Economic Analysis Group Seminar, the Center for the Study of Market Processes colloquium at George Mason University, and the Departments of Economics at the University of Florida and Trinity University. We are grateful to the Earhart Foundation for partial financial support. D 1990 by Federal Legal Publications. Inc.

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