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Economics of Sales Below Cost Laws
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106 b
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Over the three decades, courts have drasticallylimited the viability of predatory pricing claimsunder the federal antitrust laws. With the federalcourts modern approach to evaluating predatorypricing claims, state laws prohibiting sales belowcost create an alternative method for firms tolegally prevent sales that may be predatory. Thisbook examines the legal history of sales below costlaws and predatory pricing under the federalantitrust laws. It then evaluates how these lawsdiffer in application and a firm's incentivesarising from state legislation preventing below costsales. If the laws are effective and pricing belowcost is a legitimate concern, this legislationshould protect small businesses in various retailindustries. Empirical tests are performed to examineif the laws are effective in protecting smallbusinesses from either predatory pricing or lossleader selling. This analysis should help inunderstanding the impact of these state laws onsmall businesses and should be particularlyuseful to professionals in Legal or Economicsfields, or anyone that maintains an interest inantitrust issues or public policy.
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