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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
Unraveling Predatory Pricing: Insights From Case Studies and Game Theory Modeling
Author(s)
Panitnan Asawinchai
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DOI:10.17265/2328-2185/2023.06.004
Affiliation(s)
Cheltenham Ladies’ College, Cheltenham, UK
ABSTRACT
This paper develops a game-theory model for predatory pricing via in-depth analyses of three case studies: Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., Matsushita Electric Industries Co. v. Zenith Radio Corporation, and AKZO Chemie BV v. Commission of the European Communities. This model is based on subsequent action game theory models and rational economics behavior, offering a chronological outline of the “predation” stages. It presents the predator’s decisions, the prey’s potential responses, possible loops, and the two distinctive outcomes. The analysis of the model in context of the three case studies demonstrates its practicality in assessing real-life predatory pricing scenarios and players’ strategies. It’s flexibility also allows applications in related fields. Overall, this paper offers a comprehensive framework that bridges the gap between law, economics, and game theory in the study of predatory pricing, informing future research in this area.
KEYWORDS
behavioral and social sciences, game theory, antitrust, predatory pricing, anticompetitive practices, monopoly, business law
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