The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Limit Pricing

  • Stephen Martin
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_1181

Abstract

The central idea of limit pricing is that an incumbent monopolist or collusive group will or can forestall entry by charging some price below that which maximizes static own profit. But a strategic price response is only one possible incumbent response to entry. A full understanding of the determinants of equilibrium market structure in inherently oligopolistic industries must take the full range of possible responses into account.

Keywords

Advertising Commitment Entry Excess capacity Limit pricing Potential competition Predatory pricing 

JEL Classifications

D4 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Stephen Martin
    • 1
  1. 1.