Predatory Pricing and Marketing Theory: Applications in Business-to-Business Context and Beyond

Abstract

ABSTRACT There is an increasing gap between the insights from modern economic and strategic theory, and the current judicial policy to evaluate predatory pricing cases. Marketing insights, data collection, and analysis methods can uniquely aid decision-making in the courts and lead the way for a contemporary antitrust approach. The contributions and limitations of the existing paradigm in enforcement are summarized. The courts' current decision-making paradigm is detailed in four steps: Is the defendant business sacrificing current profits? Can the business recoup its strategic sacrifice? How are the business' relevant competitors affected? And ultimately, will there be injury to buyer welfare? Each step is substantiated with expanded perspectives and insights from marketing, and examples in business-to-business context to synthesize theory and practice. A managerial decision-making framework is developed. Future research perspectives are identified. A cross-disciplinary timetable of the evolution of predatory pricing in the U.S. is also presented.