A limit price (or limit pricing) is a price, or pricing strategy, where products are sold by a supplier at a price low enough to make it unprofitable for other players to enter the market. It is used by monopolists to discourage entry into a market, and is illegal in many countries.

What do you mean by limit pricing?

Limit pricing refers to the pricing by incumbent firm(s) to deter or inhibit entry or the expansion of fringe firms. The limit price is below the short-run profit-maximizing price but above the competitive level.

What is limit price in economics?

Limit pricing is defined as pricing by the incumbent firm(s) to deter the entry or the expansion of fringe firms. Limit pricing is a pricing strategy designed as a barrier to entry in order to protect a firm's monopoly power & supernormal profit.