tzs86d13
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 Posted: Mon 15:08, 08 Jul 2013 Post subject: Californiabased Apple and Redmond |
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An unseccessful limit pricing strategy can occurs if one of the firms involved cannot make the rational link between costs and future profits."For limit pricing to effectively prevent entry by rational competitors, the preentry price must be linked to the postentry profits of potential entrants."These occur when a company already in the market makes a decision about production possibilities. In a game, the incumbent company has first mover advantage. The company deciding whether or not to enter the market has to wait and see what the incumbent will do.
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