Essay: Creating a monopoly

In the long run, the predatory merchant can easily be transformed into a monopoly. A good example of such an act would be selling of gasoline for a price that is less than cost. This would be considered illegal under the antitrust act because it would mean that small companies which might not be able to sustain the low prices without making losses would have to pull out of the market.

This would inevitably take place bearing in mind that the buying price for gasoline is almost standardized all over the world.

However, reduction of competition without fraud is not an antitrust violation. That is why it is almost impossible to conclude that a company that has lowered the prices for its commodities or services is committing the predatory pricing offence when it could genuinely be engaging in a healthy price competition. Furthermore, those against the illegalization of predatory pricing argue that there is no proof in history that shows the development of a monopoly through such price-lowering activities.

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