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The Economics of Sales Below Cost Laws. Edition No. 1
VDM Publishing House, Sep 2008, Pages: 112
Over the three decades, courts have drastically
limited the viability of predatory pricing claims
under the federal antitrust laws. With the federal
courts’ modern approach to evaluating predatory
pricing claims, state laws prohibiting sales below
cost create an alternative method for firms to
legally prevent sales that may be predatory. This
book examines the legal history of sales below cost
laws and predatory pricing under the federal
antitrust laws. It then evaluates how these laws
differ in application and a firm's incentives
arising from state legislation preventing below cost
sales. If the laws are effective and pricing below
cost is a legitimate concern, this legislation
should protect small businesses in various retail
industries. Empirical tests are performed to examine
if the laws are effective in protecting small
businesses from either predatory pricing or loss
leader selling. This analysis should help in
understanding the impact of these state laws on
small businesses and should be particularly
useful to professionals in Legal or Economics
fields, or anyone that maintains an interest in
antitrust issues or public policy.
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