Predatory and Discriminatory Pricing

When managers have the task of set products and/or services, many factors are taken into account. One of these factors include legal requirements that companies have to elapse union nail down by the United States and foreign laws. These laws are set to protect consumers from vulturous determine and invidious determine (Horngren 2011). vulturine price is a situation where a company prices its products below its cost of production in score to eliminate disputation to the point where the controversy has to set aside the food market 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 much(prenominal) high prices because ambition has been knocked off the scene (Horngren 2011) (Garg, 2011). In this authority companies may be challenged to prove their intent when this occurs. In the article, Is predatory pricing keen? in The Economic Times, the author explai ned that it may be uncontrollable to prove if a company is utilise predatory pricing to get rid of competition. The author explained use three reasons. First, it must(prenominal) be determined if a company is pricing their products at below variable cost. Companies that do not win their fair variable cost, they drop 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 raises pri ces, other companies will come along with ! cupboard 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 rarity why companies would practice such an offense. If we think about our normal lives in that respect are many instances where discriminatory pricing reigns, one deterrent example is buying a car. get a car from a dealership is a game,...If you want to get a honest essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper