Predation with a Learning Curve
Luı́s Cabral, Michael Riordan · RePEc: Research Papers in Economics · 1995
An economic definition of predation is applied to a dynamic model of duopoly competition with learning curves. It is shown that rational predation occurs in equilibrium, and below-cost pricing is neither a necessary nor a sufficient indicator of predation. A conceptual framework for antitrust analysis of predation shows that a prohibition of predation might help or harm consumer welfare depending on the parameters of the model, although the information requirements of fashioning an effective legal rule against harmful predation are formidable.