QUESTION 7
Qualcomm Faces European Competition Probe over Claims of Predatory Pricing. The European Union Competition Chief said: “ We are launching these investigations because we want to be sure that high-tech supplies can compete on the merits of their products” Qualcomm responded that the claims were “without merit”. On similar grounds, Qualcomm was fined in China for a bit below one billion dollars. Please, read this article: Qualcomm Faces Scrutiny over Antytrust Allegations. Hint: To answer the following questions you may consider Parkin pages 234, 235, 325, and 355.
b. In probing for predatory pricing should we consider the ATC or the MC?
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It should be defined in terms of the TFC. |
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It should be defined in terms of the AVC. |
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It should be defined in terms of the MC. |
Ans.- It should be defined in terms of AVC.
Predatory pricing occurs when a firm sets price deliberately below average variable cost. The firm suffers a loss in the short run since P<AVC but it will gain in the long run because new firms won't be able enter the market at this low price.
QUESTION 7 Qualcomm Faces European Competition Probe over Claims of Predatory Pricing. The European Union Competition...
Qualcomm Faces European Competition Probe over Claims of Predatory Pricing. The European Union Competition Chief said: “ We are launching these investigations because we want to be sure that high-tech supplies can compete on the merits of their products” Qualcomm responded that the claims were “without merit”. On similar grounds, Qualcomm was fined in China for a bit below one billion dollars. Please, read this article: Qualcomm Faces Scrutiny over Antytrust Allegations. Hint: To answer the following questions you may...