In 1997, the government accused

Microsoft of predatory pricing. Does the rule

against predatory pricing make sense in this

case? Why or why not?

Predatory pricing means it is the practice of selling a product at loss in order to drive away the existing competitors from the market and creating a barrier for the entry of new competitor in the market.

Explanation:

Pricing below costs to drive out other firms. In the short run the firm makes a loss but as other firms leave the prices are raised to higher levels that would not have been possible with competition. This an anti-competitive practice and can lead to fines by the competition firm authorities.

The consumers are in the advantage of acquiring the commodity at lower price. The firm may acquire the monopolistic power over the rival firms abut it may create a short term economic rivalry among the competitive firms.