Predatory pricing

Predatory pricing is when a big company tries to destroy a smaller company by selling their products at really low prices. Imagine you have a lemonade stand and your neighbor also has a lemonade stand. Your neighbor decides to sell lemonade for 5 cents a glass while you sell it for 50 cents a glass. You will lose customers because they can get the same thing for much cheaper at your neighbor's stand. Maybe you will have to close your lemonade stand because you’re not making enough money. This is what predatory pricing looks like in the real world.

In the same way, bigger companies might sell their products at very low prices to force their smaller competitors out of business. They may take losses for some time in order to be the last ones standing. Once their smaller competitors are gone, they can raise their prices again and become a monopoly. A monopoly is when only one company makes and sells a certain product or service. When a company becomes a monopoly, they can charge more money because people have no other options. This is why predatory pricing is illegal in many countries as it can harm competition and the consumers.