≡ Menu

Big-Foot Economics

Here’s a letter that I sent today to the Boston Globe:

Jeff Jacoby masterfully exposes as self-serving the American Booksellers Association’s complaint about the low prices charged for books by Wal-Mart and Target (“The war against affordable books,” October 28).

It’s sad but predictable that many business people oppose competition in their own industries.  Rather than work harder to earn consumers’ dollars, businesses have a long and sordid history of protecting their profits by demanding that government hamstring their more entrepreneurial rivals.

Of course, these demands always are presented as noble quests to protect consumers from “predatory pricing” – price-cutting today that allegedly results in monopoly power for the price-cutters tomorrow.  But despite the (also sad but predictable) fact that politicians and academics take concerns about “predatory pricing” seriously, history offers not a single clear example of price-cutting today, by private firms, leading to consumers being harmed by monopoly power tomorrow.

Reported sightings of predatory pricing are as credible as are reported sightings of Big Foot.

Donald J. Boudreaux

As my friend Hans Eicholz notes, a far bigger — and far more real — problem than “predatory pricing” is predatory lobbying.