Final answer:
The strategy where a firm sets very low prices to force competitors out of the market is called predatory pricing, which deters potential competition but is difficult to prove and violates U.S. antitrust laws.
Step-by-step explanation:
The pricing strategy that involves setting prices low enough to drive smaller competitors out of the market is known as predatory pricing. This approach aims at creating barriers to entry and intimidating potential competition, which can result in a firm maintaining or even strengthening its monopoly power within the market. However, it's important to note that predatory pricing is considered a violation of U.S. antitrust law but proving it can be complex. Firms might sell products below their average variable cost, which is a signal for predatory pricing, yet quantifying these costs in reality is often challenging.