AN APPLICATION OF THE ECONOMIC MODELING APPROACH TO THE INVESTIGATIONOF PREDATION

This paper is concerned with the identification of predatory behaviour in the bus industry. An economic model of competition is used to dete rmine competitive equilibria in markets where predation is alleged. Th e model can show whether a competitive entry opportunity exists in the market where entry has occurred. This modeling approach is compared w ith a more conventional ''rule-of-reason'' approach used by the Office of Fair Trading and by the Monopolies and Mergers Commission to inves tigate predation in the town of Inverness.