Friday, February 22, 2002

Is it right to sell things below cost in order to drive out your competitors? This has recently been an issue here in Virginia, with small gas stations suing large gas corporations. Companies like Sheetz and Wawa are expanding into new markets, selling gas at below-cost in order to force the local stations out of business. At first glance, this seems wrong to me. You're competing unfairly, since they obviously don't have the resources that you do. Furthermore, there is concern that prices will be raised significantly above cost after the small company goes out of business. However, on review, it's not that unfair. The gasoline is yours to do with as you wish. If you want to give it away, that's your business. Furthermore, if it causes someone to buy your gas, then purchase a soda and some candy inside, you've made extra profit. No one complains when grocery stores have special sales or when department stores put items on clearance to make way for new inventory. Besides, federal antitrust laws would mean that there will always be competition, and so prices should always remain fairly low. While it isn't nice, it's not wrong. Such is the nature of the beast.

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