Re: Dumping.
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When B goes broke, the factories will still be there, those facotries will go on auction. Thereby if C buys that factory he will be in condition to compete with me , in spite of me deciding to lower my prices.
Do you have any example where a company used predatory pricing and then the raised the prices affecting the consumers?
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Why would C buy the factories if you're just going to undercut him? Obviously the factory is capable of producing ham at $10 and not lower, otherwise B wouldn't be out of business.
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Company A cannot undercut everyone forever, they have to to turn a profit before their capital supply runs out, and that profit must be more than the regular profit they would make from normal competitive pricing in the market. By enacting "predatory" pricing company A has effectively increased its costs for all units sold after they raise the prices again, so in reality they have simply encouraged (not discouraged) competition since factory owner C can now gain all of A's market share just by producing at the normal $10 per unit price which A can no longer match.
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Usually the dumper has a protected home market, and dumps their product to foreign markets. They just undercut as long as they need to, as even while taking a slight loss in the foreign market, the money gained home market > money lost in foreign market.
So in some cases, they can undercut forever.
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