I'd also add that predatory pricing isn't even necessarily predatory if the above condition is met. After all, what if the competition isn't driven out of business (i.e. the pricing tactics result in no predation--i.e. loss of a competitor)? What if it is to get past some threshold to justify the fixed costs or some such. The condition she outlined strikes me as a necessary one, not a sufficient one.

Of course, I'll have to check Tirole when I get back in the office on Monday to make sure.

"Users with a Google account simply enter a credit card account number ..."

"Google Checkout, as reported by The New York Times, is priced at rates which undercut current credit card processing feesâ?¦."

If Google is using current credit card accounts, how are they undercutting current credit card processing fees? I can see how they could offer this with no premium (since the ad revenue can cover the costs of processing for them), but I am not sure how they could undercut since I would think that the credit card companies would expect the same fees.

Google Inc. is challenging the Internet's leading payment service, PayPal, with a much-anticipated s...