ABSTRACT
Network carriers have used 'sharp' and 'tightly-focused' price cuts and predatory pricing to evict low cost entrants and then raised prices. Government prosecutors in the American Airlines and Air Canada predatory pricing cases painted a similar picture; one of an industry dominated by strong monopolists who use their mobile capacity and reputation for toughness to fight entrants. Entry in thinner markets is more likely to be unsuccessful and the response of incumbents has no statistically discernable effect on the probability of exit by low cost carriers. At least in the aviation sector in the United States, it would appear that predation is a rare occurrence. The chapter reviews the various tests for predation; these are all well known. It also reviews the multi-faceted debate on predation. The traditional divide in the predation debate is often characterized as 'Chicago' vs. 'post-Chicago'.
