Question

Tying, resale price maintenance, or predatory pricing?

Coolaire is the only firm producing refrigerators. It costs $1,000 to produce a refrigerator, and Coolaire sells each refrigerator for $1,200. After Chillbox, a new firm with the same costs as Coolaire, enters the market for refrigerators, Coolaire starts selling its refrigerators for a price of $550.

Answer 1

PREDATORY PRICING

Step-by-step explanation:

Predatory pricing is the pricing of goods or services at such a low level that other firms cannot compete and are forced to leave the market.

Therefore if Coolaire is the only firm producing refrigerators that costs $1,000 to produce a refrigerator, and Coolaire sells each refrigerator for $1,200 and After Chillbox, a new firm with the same costs as Coolaire, enters the market for refrigerators, Then Coolaire starts selling its refrigerators for a price of $550; Then Coolaire is definitely practicing Predatory pricing