Synonyms
Definition
It is a strategy aiming to increase the cost of an entity’s competitors in order to disadvantage and even exclude them from the market.
Raising Rivals’ Costs: How It Works!
The original cases that founded the raising rivals’ cost (RRC) theory relate to famous monopolization cases faced by the US Federal Trade Commission (e.g., Alcoa, DuPont de Nemours, Kellogg, and Standard Oil) where firms interfere in input or upstream markets in ways that reduce rivals’ profits. In most cases, the premise of the RRC theory goes as follows: the predatory firm increases their competitors’ costs by developing exclusive relationships with strategic suppliers, such as input overbuying, naked exclusion – where the supplier is committed not to sell inputs to competitors – and controlling the whole supply chain in order to prevent rivals from accessing consumption markets (Granitz and Klein 1996; Carlton and Perloff 1998; Scheffman and Higgins 2003, 2015). It is...
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References
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Mzoughi, N., Grolleau, G. (2021). Raising Rivals’ Costs. In: Marciano, A., Ramello, G.B. (eds) Encyclopedia of Law and Economics. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-7883-6_403-2
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DOI: https://doi.org/10.1007/978-1-4614-7883-6_403-2
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Chapter history
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Latest
Raising Rivals’ Costs- Published:
- 24 March 2022
DOI: https://doi.org/10.1007/978-1-4614-7883-6_403-2
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Original
Raising Rivals’ Costs- Published:
- 27 May 2016
DOI: https://doi.org/10.1007/978-1-4614-7883-6_403-1