Predatory pricing is a business strategy where a company sets its prices below cost to drive competitors out of the market. The goal is to later raise prices and recover any lost money once the competition is gone.

Key characteristics include:

• Prices are set below the cost of production.
• The company must have strong financial reserves to survive the initial period of financial loss.
• Once rivals leave the market, the company raises prices to monopoly levels.
• It requires high barriers to entry, meaning it is difficult for new competitors to enter the market once the company raises its prices.

It is often difficult to prove this strategy in court, as companies may claim that low prices benefit consumers. However, it is considered anti-competitive and is illegal in most countries when the intent to create a monopoly is proven.