Limit Pricing (AS/A LEVELS/IB/IAL)

Limit Pricing

• This pricing strategy is used by firms to discourage new entrants.
• Limit pricing is a strategy to gain market share or increase profitability.
• Firms charge a price low enough to discourage new entrants but ensure they are not making a loss.
• This also allows firms to exploit economies of scale.
• Limit pricing is not illegal in the UK.