What are the Negative Impacts of Predatory Pricing?

[Suba]

Predatory pricing is the practice of selling goods at very low prices, even below production costs or capital costs, with the aim of controlling the market as a whole. But after having no competitors, business actors/entrepreneurs will gradually increase the selling price. In many countries, predatory pricing practices are strictly prohibited and will even be subject to criminal penalties.
However, predatory pricing practices set by entrepreneurs will be difficult to prove, because entrepreneurs can argue that they are only giving price discounts.

 

[King Belieal]

Predatory pricing has negative impacts on the society and the market because it would eliminate competition and create a monopoly which is not good.

 

[Augusta]

Reduced Competition: Predatory pricing can eliminate competitors, especially smaller businesses, leading to a less competitive market.

 

[Tobi]

In economics there is no such thing as predatory pricing. That is an emotionally tinged word used to get you angry when logic would get you to understand.

There are always investors looking for ways to invest their money, always. When supply exceeds demand for a product, price, and profits rise to balance supply and demand. As those profits rise, they entice investors to invest in new capacity there because there is money to be made. That increases supply, returning profits to a moderate and normal level.

 

[Augusta]

A sharp decline of price forces other competitors to exit the market and the rest to experience financial loss.