Also known as: market pre-emption · preemption · market preemption doctrine
Written by attorneys · grounded in primary & secondary sources — see below
A monopolistic strategy by which a dominant firm raises its rivals' costs relative to its own. The strategy allows the firm to secure or maintain its market position without incurring the immediate losses associated with predatory pricing.
Select any source to read its text and confirm it supports the definition.
Midwest Airlines controls the only fuel depot at a regional hub. It imposes a surcharge on fuel sold to Meridian Motors that exceeds the cost Midwest itself pays. Meridian Motors must either absorb the higher expense or reduce flights, allowing Midwest to capture additional routes without lowering its own fares.
Marathon Logistics owns the sole rail terminal serving a major port. It charges Magnolia Foods a premium access fee that Marathon does not impose on its own shipments. Magnolia Foods must either pay the fee or reroute cargo at greater expense, enabling Marathon to expand its market share immediately.
Market preemption allows the dominant firm to generate immediate profits while raising rivals' costs. Predatory pricing requires the firm to sustain short-term losses in the hope of recouping them later through monopoly prices.
Supporting sources