In order for "limit pricing" to be effective, the firm practising such a strategy must be able to charge a price that is lower than the potential entrant's ATC but greater than the firm's own ATC.
Step-by-step explanation:
A pricing strategy is a level where products are sold by a supplier at an expense that is cheap enough to make the market unprofitable for others. Monopolies use it in order to discourage market entry and in many cases it is illegal.
It is not able to sustain a monopolistic-ally profitable firm where P = MC and growth, with a long-run balance, generates an efficiency that approaches the minimum possible in an ATC business. Profit so long as potential customers can not enter the market.