Economics Oligopoly Questions
Predatory pricing in oligopoly refers to the practice of setting very low prices in order to drive competitors out of the market. This strategy is used by dominant firms in an oligopolistic market structure to eliminate competition and gain a larger market share. By temporarily selling goods or services at prices below their production costs, the predatory firm aims to make it financially unviable for smaller competitors to continue operating. Once the competition is eliminated, the predatory firm can then raise prices and enjoy higher profits in the long run.