The Areeda–Turner Test for Exclusionary Pricing:
A Critical Journal
Published online: 17 March 2015
Ó Springer Science+Business Media New York 2015
Abstract Few scholarly articles have had the impact enjoyed by Areeda and
Turner’s (Harv Law Rev 88(4):697–699, 1975) article on predatory pricing, which is
elaborated in the Antitrust Law (Areeda and Hovenkamp in Antitrust law. Aspen
Publishers, New York, 2015) treatise. Proof of predatory pricing under the Areeda–
Turner Test requires two things: a market structure plausibly indicating the possibility
of ‘‘recoupment,’’ and prices below a relevant measure of cost, which was presump-
tively average variable cost (AVC). That so many courts embraced the Areeda–Turner
Test might seem surprising, given that contemporary assessments from economists
were quite negative: They faulted the AVC test itself, the test’s inadequate consid-
eration of ﬁxed costs, and the exclusive focus on short-run (nonsustainable) strategies.
Keywords Antitrust Á Monopolization Á Predatory pricing Á Pricing strategies
Few works of legal scholarship have had the impact enjoyed by Areeda and
Turner’s (1975) article on predatory and strategic pricing (Areeda and Turner 1975).
Every federal circuit court except the Eleventh has embraced some variation of the
test that Areeda and Turner proposed.
The Supreme Court has come very close to
adopting it as well.
& Herbert Hovenkamp
University of Iowa College of Law, 432 Boyd Law Building, University of Iowa, Iowa City,
IA 52242, USA
On the Eleventh Circuit’s position adopting an average total cost test see McGahee v. Northern
Propane Gas Co., 858 F.2d 1487, 1496 (11th Cir. 1988), cert. denied, 490 U.S. 1084 (1989). On
individual variations in the other Circuits, see Areeda and Hovenkamp (2015 }724c3).
Rev Ind Organ (2015) 46:209–228