The predatory pricing argument is very simple. The predatory firm first lowers its price until it is below the average cost of its competitors. ... If they fail to cut their prices, they will lose virtually all of their market share; if they do cut their prices, they will eventually go bankrupt.

What's wrong with predatory pricing?

Predatory pricing violates antitrust laws, as it makes markets more vulnerable to a monopoly. However, allegations of this practice can be difficult to prosecute because defendants may argue successfully that lowering prices is part of normal competition, rather than a deliberate attempt to undermine the marketplace.

Why is predatory pricing unethical?

Predatory pricing is pricing a product lower than the competition in the hopes of driving that competition out of business. ... Either way, it's unethical in part because it is pricing to hurt competitors, not to help consumers.