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    Categories>Career & Business>What is Predatory Pricing? Driving Competitors Out of the Market

    What is Predatory Pricing? Driving Competitors Out of the Market

    18 min
    |
    |
    Apr 26, 2026
    BusinessEconomicsSociety

    Learn how predatory pricing works when companies set prices below cost to eliminate competition and gain monopoly power in a specific market.

    What is Predatory Pricing? Driving Competitors Out of the Market

    Best quote from What is Predatory Pricing? Driving Competitors Out of the Market

    “

    At its core, predatory pricing is about the long game—trading short-term losses for a future where you have no other choice but to pay whatever they demand.

    ”

    This audio lesson was created by a BeFreed community member

    Input question

    Question: 1 ( QId: 2039305) Review End (Tutored, Untimed) When a company deliberately sets prices lower than costs to drive competitors out of the

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    Learning style
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    Knowledge sources
    Predatory Pricing: Definition, Example, and Why It's Used (2026)
    link
    https://investguiding.com/article/predatory-pricing-definition-example-and-why-it-s-used
    Predatory Pricing - Definition, Legalities, Examples
    link
    https://corporatefinanceinstitute.com/resources/knowledge/strategy/predatory-pricing/
    antitrust laws | Wex | US Law | LII / Legal Information Institute
    link
    https://www.law.cornell.edu/index.php/wex/antitrust_laws
    Brooke Group Ltd. v. Brown & Williamson Tobacco Corp.
    link
    https://supreme.justia.com/cases/federal/us/509/209/
    BROOKE GROUP LTD., Petitioner v. BROWN & WILLIAMSON TOBACCO CORPORATION. | Supreme Court | US Law | LII / Legal Information Institute
    link
    https://www.law.cornell.edu/supremecourt/text/509/209

    Frequently Asked Questions

    Predatory pricing is a deliberate business strategy where a company sets its prices significantly lower than its production costs. The primary goal of this anti-competitive practice is to drive existing competitors out of the market and discourage new entrants. By sacrificing short-term profits, the company aims to establish a dominant position or monopoly power, eventually allowing them to raise prices once competition has been eliminated.

    Pricing below cost disrupts healthy market competition by creating an unsustainable environment for smaller rivals who cannot afford to match the artificial losses. While consumers may see lower prices initially, the long-term effect is often reduced choice and higher costs. Once the predatory firm successfully drives competitors out of the market, they can exploit their monopoly power to control supply and pricing without competitive pressure.

    Predatory pricing is classified as an anti-competitive practice because it focuses on harming the competitive process rather than winning through efficiency or innovation. By leveraging financial reserves to sustain losses that others cannot, a firm can unfairly seize market share. This behavior is often scrutinized by regulators because it undermines the principles of fair market competition and can lead to long-term harm for consumers and the industry.

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    Key Takeaways

    1

    The Deal That Dares to Be a Trap

    0:00
    2

    The Cold Logic of the Price War

    2:19
    3

    The Cigarette Wars and the Brooke Group Blueprint

    4:47
    4

    The Global Game of Dumping and Cartels

    7:15
    5

    Modern Giants in the Crosshairs

    9:36
    6

    The Anatomy of a Successful Predator

    11:47
    7

    A Playbook for Spotting the Trap

    13:57
    8

    Final Thoughts on the Price of Competition

    16:04

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