Antitrust reform: Predatory practices and the competitive process
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This article has suggested that the general theory of predatory practices is seriously flawed. Predatory behavior cannot be logically distinguished from benign competitive behavior either by intent or by any price-cost rules. Price reductions, selective or otherwise, and various nonprice rivalrous strategies (such as advertising and innovation) are all part and parcel of a competitive market process. This process serves an important social purpose: it serves to discover the products and services that consumers prefer, and the business organizations that can provide those products and services. Antitrust regulation of this process is based on inappropriate equilibrium theorizing, and it serves only to inhibit the discovery of consumer preferences and the flow of resources from less efficient suppliers to more efficient suppliers. Thus, the legal restriction or prohibition of any competitive practice is inappropriate and appears contrary to the newer antitrust reform attitudes.
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