Predatory and Discriminatory Pricing

When managers have the task of set products and/or services, many factors atomic number 18 taken into account. One of these factors include legal requirements that companies have to backing fellowship nail down by the United States and worldwide laws. These laws are set to protect consumers from offensive set and loaded set (Horngren 2011). vulturine set is a situation where a company prices its products below its cost of production in target to eliminate disputation to the point where the controversy has to dedicate the merchandise due to major losses. Once the challenger has been eliminated then the company increases its prices and customers are frequently forced to buy products at such high prices because rival has been knocked off the scene (Horngren 2011) (Garg, 2011). In this subject companies whitethorn be challenged to prove their intent when this occurs. In the article, Is predatory pricing keen? in The Economic Times, the author explained th at it may be uncontrollable to prove if a company is victimisation predatory pricing to get rid of competition. The author explained using three reasons. First, it must(prenominal) be determined if a company is pricing their products at below variable cost. Companies that do not ca-ca their fair variable cost, they mould a decision to leave the market.

Secondly, if costs have been reduced, then companies can reduce their prices as well. Lastly, the rationale behind predatory pricing doesnt make such(prenominal) sense. When a company drives the prices so low and gets rid of competition and then raise s prices, other companies will come along wi! th disturb down prices to beat out the higher prices (Garg, 2011). Discriminatory pricing is charging opposite prices for the same product to different customers (Horngren, 2011). One would wonderment why companies would practice such an offense. If we think about our frequent lives in that respect are many instances where discriminatory pricing reigns, one deterrent example is buying a car. purchase a car from a dealership is a game,...If you indigence to get a honest essay, order it on our website: OrderCustomPaper.com

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