What enables a company to think it can win with such a strategy?(predatory pricing)
Predatory Pricing: International Product Dumping, such as Chinese steel, is actually a version of “predatory pricing.” It is a risky business strategy whereby a company sells a product well below the cost of production with the hope they will drive competitors out of business. When the competitors are gone the predator can raise prices very high and recoup the short-term losses. In the short term this looks good for consumers. The risk is that the predator can’t drive away the competition and never recoups the losses. Can you think of any domestic cases of predatory pricing? World Trade Organization Dispute Map: Go to the World Trade Organization’s Dispute Map (https://www.wto.org/english/tratop_e/dispu_e/dispu_maps_e.htm) and explore the various trade disputes. Report back on one dispute. Which countries are involved? What is the accusation?
