If the firm is willing to engage in limit pricing it could, in the short run at least, charge a price as low as PL and produce a quantity as large as QL.

    As a long run strategy this isn't very practical. At price PL the firm earns zero profit and so is no better off that it would be with free entry. On the other hand, limit pricing may work well as a short run barrier until the firm can devise other barriers that allow it to sustain long run profits.

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