Microeconomics

Microeconomics

The existing monopoly may employ (legal) limit pricing to keep the threat of competition low, or apply predatory pricing. Illegal in the UK, predatory pricing involves setting the price below cost, with the intent to drive out their rivals, and then raise prices again. Another such formal form of collusion is cartels, however they are also forbidden by law. Fortunately, such anti-competitive practices are removable, however unfortunately, as I have discussed above: tacit collusion is the most likely and the hardest to prove and stop. Furthermore, there is resale price maintenance where the manufacturer will fix the price that the retailer ...