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Technology Stocks : Intel Corporation (INTC)
INTC 34.32-1.2%3:59 PM EST
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To: Andy Goett who wrote (91958)11/11/1999 3:27:00 AM
From: nihil  Read Replies (1) of 186894
 
The problem is that almost everyone thinks in terms of predation when average costs are rising, while, in fact, the problem arises when average costs are falling. In the standard empirical case the LRAC curve is "L" shaped, as is the LRMC. In such a situation monopoly is the natural outcome, with the lowest MC company the sole survivor. In running the other rivals out of business, the monopolist to be may not legally undercut the rival's price even if his average or marginal cost is below the rival's price if his purpose is to destroy competition.
The Supreme Court has pretty much abandoned the idea of predatory pricing. In the Japanese TV case it ruled that it would be irrational for the Japanese TV companies to conspire to undercut prices in the U.S. market in order to seize market share, thus kissing off the whole US TV industry.Check over y9our class notes and see if you got it down right.
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