The Necessary Complexity of Predatory Pricing Analysis

• Author: Abraham L. Wickelgren
• Published date: 01 March 2016
• Date: 01 March 2016
• DOI: http://doi.org/10.1177/0003603X15625124

Article

The Necessary Complexity

of Predatory Pricing Analysis:

A Comment on Richard

S. Markovits’s Treatment

of Predatory Pricing in Economics

and the Interpretation and

Application of U.S. and E.U.

Antitrust Law

Abraham L. Wickelgren*

Abstract

While I agree with much of what Markovits writes about predatory pricing, I focus on two main

areas of disagreement. First, tests for predatory pricing should reflect an optimal balance of

deterrence of anticompetitive predation while minimizing the chilling of procompetitive price

competition, whether or not this maximizes the accuracy of the tests. Second, while liability

based on subjective beliefs (not intent) about predation generate optimal incentives if courts are

perfect, an objective test might accomplish this better due to imperfect decision-making. I also

expand on a point which Markovits makes with which I agree and is of fundamental importance.

Quick screens for predatory pricing are only valuable if they are both substantially less costly than

directly evaluating the deterrence/chilling balance and are not substantially worse at achieving this

balance. Most tests for predatory pricing, such as the commonly used price-cost test, do not

clearly satisfy these criteria.

Keywords

predatory pricing, subjective intent, price-cost tests

*Professor of Law, The University of Texas at Austin School of Law

Corresponding Author:

Abraham L. Wickelgren, The University of Texas at Austin School of Law, Austin, TX 78705, USA.

Email: awickelgren@law.utexas.edu

The Antitrust Bulletin

2016, Vol. 61(1) 186-197

ªThe Author(s) 2016

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DOI: 10.1177/0003603X15625124

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