Predation and Its Rate of Return: The Sugar Industry, 1887-1914 / David Genesove, Wallace P. Mullin.

Format:

Book

Author/Creator:

Genesove, David.

Contributor:

National Bureau of Economic Research.

Mullin, Wallace P.

Series:

Working Paper Series (National Bureau of Economic Research) no. w6032.

NBER working paper series no. w6032

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Predation and Its Rate of Return

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1997.

Summary:

We study entry into the American sugar refining industry before World War I. We show that the price wars following two major entry episodes were predatory. Our proof is twofold: by direct comparison of price to marginal cost, and by construction of predicted competitive price cost margins that we show to exceed observed margins. We argue that predation occurred only when the relative cost of it to the dominant firm was small, and that it was most probably used to deter future capacity additions. It was also used to lower the purchase price of preexisting firms after one entry episode.

Notes:

Print version record

May 1997.