TY  - JOUR
AU  - Genesove,David
AU  - Mullin,Wallace P.
TI  - Predation and Its Rate of Return: The Sugar Industry, 1887-1914
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6032
PY  - 1997
Y2  - May 1997
UR  - http://www.nber.org/papers/w6032
L1  - http://www.nber.org/papers/w6032.pdf
N1  - Author contact info:
David Genesove
Department of Economics
Faculty of Social Sciences
Hebrew University of Jerusalem
Mount Scopus, Jerusalem 91905  ISRAEL
Tel: 972-2-5883128
Fax: 972-2-5816071
E-Mail: genesove@mscc.huji.ac.il

Wallace Mullin
Department of Economics
George Washington University
2115 G Street N.W.
Washington, DC 20052
Tel: 202/994-8087
Fax: 202/994-6147
E-Mail: wpmullin@gwu.edu
AB  - We study entry into the American sugar refining industry before World War I.  We show that the price wars following two major entry episodes were predatory.  Our proof is twofold: by direct comparison of price to marginal cost, and by construction of predicted competitive price cost margins that we show to exceed observed margins.  We argue that predation occurred only when the relative cost of it to the dominant firm was small, and that it was most probably used to deter future capacity additions.  It was also used to lower the purchase price of preexisting firms after one entry episode.
ER  -