Managerial Economics: Applications, Strategy and Tactics 12th Edition by James McGuigan, Charles Moyer, Frederick Harris

Exercise 3

The EU claims that Boeing was given $3.2 billion in tax exemptions by the State of Washington to support the Boeing Dreamliner 787 project. The United States claims that Airbus received $6 billion in loans that do not need to be repaid to support the research, development, and launch aid for the Airbus 380 Superjumbo. These charges and countercharges at the World Trade Organization pertain to whether either firm is "dumping" when it brings the first 787s and 380s to market. What category of cost must be covered by the early penetration prices in order to avoid such charges of predatory pricing