1)Post a 1 – 2 paragraph response to exercise 25(b).
2) Analyze and post a response to a classmate’s post to 25(a)
Classmate’s post :
The theory that likely caused the damages in this case is that Up North Marina has been involved in predatory pricing, thus obtaining an illegal monopoly on marina operations at Lake Woodward. Companies involved in this type of activity intentionally set their prices at a level that other companies cannot compete with, and therefore sustain their profits by driving out competitors.
In order to appropriately compute the associated damages, additional information regarding Up North, as well as previous competitors, must be obtained. The ultimate damages depend on the estimated harm that was caused to the plaintiff by Up North’s actions. An evaluation of price and cost information would be necessary in order to determine the extent that they were engaging in predatory pricing. Since it was stated that the lawsuit was successful in proving that Up North is liable for keeping competitors off the lake, a cost analysis would be necessary to determine whether pricing was placed below the average variable costs of the company. Relevant documents from Up North include the income statement, as well as relevant cost documents pertaining to how they price their services. Also, the income statements demonstrating the approximate losses of competitors would be needed to estimate the damages.
The damage model that I would use would be based on the experienced losses of competitors that have attempted to run operations on Lake Woodward. It would be necessary to obtain the income statements of previous competitors in the region, and determine their amount of losses that they experienced as a result of the predatory pricing. These losses, in aggregate, will help drive the monetary damages experienced by the plaintiff. The basis for the damage estimate ultimately depends on these estimated losses and would be limited to the competitors that have attempted to perform operation on the lake. The estimate would consider these losses, and use them to determine what the actual profit/loss of Up North would have been had they not been engaging in illegal activity.