Limit Pricing
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An incumbent is limit pricing if it produces more than its optimal quantity, so that there is not sufficient demand for a potential entrant. The lowest price that it sets is the "limit price" that excludes a profitable entry.
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Contributed by: Christos Papahristodoulou (January 2014)
(Mälardalen University, Sweden)
Open content licensed under CC BY-NC-SA
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Reference
[1] D. Carlton and J. Perloff, Modern Industrial Organization, 4th int. ed., Pearson Addison–Wesley, 2005.
Permanent Citation
"Limit Pricing"
http://demonstrations.wolfram.com/LimitPricing/
Wolfram Demonstrations Project
Published: January 10 2014