Limit Pricing | 60 Second Economics | A-Level & IB

Limit pricing is a pricing strategy used by a dominant firm in a market to deter entry by potential competitors.

The dominant firm sets its price below the profit-maximizing level, but above the competitive level, in order to make it unprofitable for potential competitors to enter the market.

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[kavipatel]

Thanks Geoff, can it also be used by firms in a monopoly/oligopoly to still maintain SNP without attracting interest/investigation from the CMA? Or is it only used to disincentivise new firms from entering the market?:)