8/26/2009

The Economist magazine on Predatory Pricing

The Economist magazine points to the skepticism that economists have about predatory pricing. I wish that they would have would have noted that the one place where predatory pricing is most likely to take place is government enterprises.

I couldn't agree more with this quote:

TWO decades before he won the Nobel prize for economics in 1991, Ronald Coase wrote an essay decrying the poor state of research in industrial organisation, the discipline in which he established his reputation. The field, he complained, was devoted to the study of monopoly and antitrust policy. That, he said, made for bad scholarship: an economist faced with a business practice that he cannot fathom, according to Mr Coase, “looks for a monopoly explanation”.


It has always struck me as odd that anything that economists see the first explanation is some type of monopoly power.

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