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Why does a company adopt predatory pricing and how does this type of pricing differ from...

Why does a company adopt predatory pricing and how does this type of pricing differ from price gouging?

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Answer #1

Predatory pricing, also known as undercutting, is a pricing strategy of selling the products and services at a very low price, intending to drive competition out of the market or create barriers to entry for potential new enterants.

On the other hand price gouging is totally opposite of predatory pricing.

Price gouging occurs when a seller increases the prices of goods, services or commodities to a level much higher than is considered reasonable or fair. Usually, this event occurs after a demand or supply shock. Common examples include price increases of basic necessities after natural disasters.

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