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DEEP POCKETS

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Definition:
Deep pockets is an expression used to describe the idea that extensive financial and other resources of large firms or conglomerates can be used to sell below cost for extended periods of time.

In this view, deep pockets are thought to give such firms an unfair advantage over competitors particularly if the practice of selling at prices below costs imposes losses and drives out competing firms.

Context:
Others argue that firms using "deep pockets" to finance anticompetitive actions impose a cost on themselves because those funds could be more profitably employed elsewhere. Moreover, if capital markets work reasonably well, target firms should have no trouble obtaining financing to sustain themselves through the anticompetitive action.

Source Publication:
Glossary of Industrial Organisation Economics and Competition Law, compiled by R. S. Khemani and D. M. Shapiro, commissioned by the Directorate for Financial, Fiscal and Enterprise Affairs, OECD, 1993.

Cross References:
Predatory pricing

Hyperlink:
http://www.oecd.org/dataoecd/8/61/2376087.pdf

Statistical Theme: Financial statistics

Created on Thursday, January 03, 2002

Last updated on Monday, March 03, 2003