ECON 20 Lecture Notes - Lecture 7: Predatory Pricing, Profit Maximization, Variable Cost
19 May 2020
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*john mcgee predatory pricing revisited, journal of law and economics, october 1980, pp. I would never price below the relevant cost which includes the future effects of what i"m doing. Because i can allege you"re doing it: to prove it, both sides can use depreciation, depreciate more to say charging below cost, depreciate less to say charging above cost. In antitrust the burden is on you to prove that it"s not true. There are a lot of business behaviors that are not maximizing in the short run. All sorts of things that businessman do that do not maximize profits in the sr they"re looking to future effects. Mc mc of production today plus anticipated future effects: you can"t measure so you can"t prove or disprove why you"re charging people that price. If it survives it must be doing something well enough.
