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Welcome to Keith's night. 
Don't cry, don't anyone in the 

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libertarian Institute. 
Here is Thomas soul on 

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monopolies and predatory pricing
in his book. 

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Basic economics, a citizen's 
Guide to the economy. 

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One of the remarkable theories, 
which has become part of the 

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tradition of antitrust. 
Law is predatory pricing. 

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According to this Theory, a big 
company that is out to eliminate

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its smaller competitors and take
over their share of the market 

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will lower its prices to a 
level. 

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That Dooms the competitor to 
unsustainable losses, forcing it

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out of business when the smaller
companies resources run out then

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having acquired a monopolistic 
position. 

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The larger company will raise 
its prices. 

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Not just a previous level but to
a new and higher level in 

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keeping with its new 
monopolistic position. 

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Thus it recoups its losses and 
enjoys above normal profits 

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thereafter at the expense of the
consumers, according to Theory 

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of predatory pricing. 
One of the most remarkable 

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things about this theory. 
Is that those who Advocate it 

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seldom even attempt to provide 
any concrete examples of when 

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this ever actually happened, 
perhaps, even more remarkable. 

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They have not had to do. 
So even in courts of law in 

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antitrust, cases Nobel 
prize-winning Economist. 

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Gary. 
Becker said, I do not know of 

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any documented predatory pricing
case yet. 

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Both the A&P Grocery chain in 
the 1940s. s and the Microsoft 

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Corporation in the 1990s were 
accused of pursuing such a 

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practice in antitrust cases, but
without a single example of this

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process having gone to 
completion instead their current

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low prices in the case of A and 
P and the inclusion of a free 

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internet browser in Windows 
software, in the case of 

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Microsoft have been interpreted 
as directed towards that end 

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though, not having actually 
achieved it since it is 

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impossible to prove a negative 
the Use company cannot disprove,

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that it was pursuing such a 
goal. 

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And the issue simply becomes a 
question of whether those who 

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hear the charge choose to 
believe it. 

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Predatory pricing is more than 
just a theory without evidence. 

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It is something that makes 
little or no economic sense. 

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A company that sustains losses 
by selling below cost to drive 

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out, a competitor is following a
very risky strategy. 

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The only thing that it could be 
sure of is losing money 

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initially whether it will ever 
recover enough extra profits. 

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To make the gamble pay off in 
the long run is problematical 

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whether it can do. 
So and escape the antitrust laws

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as well is even more 
problematical and antitrust laws

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can lead to millions of dollars 
in fines and/or, the 

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dismemberment of the company, 
but even if the would be 

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Predator manages to somehow 
overcome these formidable 

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problems. 
It is by no means clear that 

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eliminating all existing 
competitors will mean 

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eliminating competition, even 
when a rival firm has been 

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forced into bankruptcy. 
It's physical equipment and the 

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skills of the people who once 
made it viable. 

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Do not vanish Into Thin Air. 
A new entrepreneur can come 

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along and acquire both perhaps 
at a low distress sale prices, 

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for both the physical equipment,
and the unemployed workers 

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enabling the new competitor to 
have lower costs than the old. 

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And hence, to be a more 
dangerous competitor able to 

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afford to charge lower prices or
to provide higher quality at the

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same price, Thomas ol than cites
the example in 1833 of the 

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Washington Post purchase by 
Eugene Meyer bankruptcy can 

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eliminate particular owners and 
managers but it does not 

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eliminate competition in the 
form of new people who can 

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either take over an existing 
bankrupt Enterprise or start 

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their own new business from 
scratch in the same industry, 

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destroying a particular, 
competitor or even all existing 

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competitors does not mean 
destroying competition, which 

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can take the form of new firms 
being formed in short, 

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predatory. 
Thing can be an expensive 

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Venture with little Prospect of 
recouping, the losses by 

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subsequent Monopoly profits. 
It can hardly be surprising. 

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That predatory pricing remains a
theory without concrete 

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examples. 
What is surprising is how 

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seriously that unsubstantiated 
theory is taken in antitrust? 

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Cases. 
Thank you for watching Keith 

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Knight. 
Don't try it on anyone in the 

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libertarian Institute.