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you are a chief economist for a firm with market power. This is a large firm...

you are a chief economist for a firm with market power. This is a large firm with well-established markets and customers. A potential new firm is considering to enter the market and compete with you. How can your firm use "limit pricing" to deter this new potential from coming into the market? analyze and discuss.

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It can be mentioned that because our firm is already existing in the market and has a certain brand name the limit pricing can be used where the price will be lowered in such a way that it would be less than the average variable cost of the product for the other form as a result of which they cannot price the product below or equal to our firm and this can result in forcing the new entrant to leave the market and in this way we can actually keep the new entrants survey by using limit pricing all in all

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