Chapter Outline

Headline: Barkley and Sharpe to Announce Plans at Trade Show

1. Introduction
2. Limit Pricing to Prevent Entry
   1. Theoretical Basis for Limit Pricing
   2. Limit Pricing May Fail to Deter Entry
   3. Linking the Pre-Entry Price to Post-Entry Profits
      1. Commitment Mechanisms
      2. Learning Curve Effects
      3. Incomplete Information
      4. Reputation Effects
   4. Dynamic Considerations
3. Predatory Pricing to Lessen Competition
4. Raising Rivals’ Costs to Lessen Competition
   1. Strategies Involving Marginal Cost
   2. Strategies Involving Fixed Costs
   3. Strategies for Vertically Integrated Firms
      1. Vertical Foreclosure
      2. The Price-Cost Squeeze
5. Price Discrimination as a Strategic Tool
6. Changing the Timing of Decisions or the Order of Moves
   1. First-Mover Advantages
   2. Second-Mover Advantages
7. Penetration Pricing to Overcome Network Effects
   1. What is a Network?
   2. Network Externalities
   3. First-Mover Advantages Due to Consumer Lock-in
   4. Using Penetration Pricing to "Change the Game"
8. Answering the Headline
9. Summary
10. Key Terms and Concepts
11. Conceptual and Computational Questions
12. Problems and Applications
13. Selected Readings