| | Hey John,
I don't know why you would just assume all Objectivists don't understand anti-trust laws.
Oh, because the ones I've run across have not actually read any antitrust laws. They've only read an article or two from the mid-1900s on the subject written by folks in Objectivist circles. Antitrust law has changed a hellova lot since then.
Predatory pricing is extremely difficult to pull off successfully and even more difficult to discovery. I don't know of any predatory pricing cases that have been brought to court, much less tried successfully in over 5 decades. It's mostly an academic problem. Fun to think about, but rarely an actualy case....which is why virtually all active antitrust law is concerned with other antitrust issues.
It's close, but I'd reword this:
You would have to first demonstrate two factors that are rarely true;
High enough barrier of entry that no matter what price Company (A) charges, there would be no incentive for someone to enter the market
High enough demand elasticity to the point no possible substitutions are available. I would reword your first factor as: High enough barrier of entry (including the cost of competing with Company (A)) would yield greater deterrence than incentive for someone else to enter that market.
I would reword your second factor as: High enough demand elasticity to the point where consumers won't turn to substitutes despites Company (A)'s supracompetitive pricing over some set period of time. This is often referred to as a SSNIP (pronounced "snip") test, which stands for Small but Significant and Non-transitory Increase in Price.
That said, there are some great apparent attempts at predatory pricing. One of the last important cases in this area was Matsushita v. Zenith, wherein Japanese companies agreed to sell TV sets in America below cost for 20 years, while recouping those losses by selling TVs at higher prices abroad. This pretty much screwed Zenith, so it sued and lost. The Japanese firms might well have had a successful predatory pricing scheme, but Zenith couldn't figure out how to prove that the Japanese companies recouped their losses abroad, or that American consumers got hurt over that time as a result of the scheme, even though TVs were probably sold at supracompetitive prices for sometime after the Japanese companies squashed their competitors.
There are other examples of attempted predatory pricing about gas stations, airlines, milk, and lots of other markets with fairly homogenous goods, big players, inelastic demands, and high barriers to entry. So far as I know, they all fail to establish successful predatory pricing.
Jordan
As a post-script, something Objectivists can amuse themselves with is the fact that high barriers to entry are often attributed to the heavy cost of regulation. Small players just can't dish out the big dough to meet the regulatory standards. The irony here is that the people who pull for the small Ma and Pa corner store are usually the same people who pull for that bloated regulation. To one another, big government and small players are anathema.
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