linguistic:paraphrasing
Long-term cost-based rule

Posner's long-term cost-based rule assumes that long-run marginal costs are a more reliable test of predation than short-run costs. This is due to the predator, who prices at short-run marginal cost, having the ability to eliminate competitors that cannot afford the same losses in the short-run. To determine predation, Posner brought forth a test that substitutes the average costs from the firm's balance sheet to establish a test that relates to the full average costs based on the company's books. The test would include certain prerequisites, an intent element, as well as a defense. As a prerequisite, Posner requires the plaintiff to demonstrate that the market was predestined for effective predatory pricing. As indicators, Posner lists, for instance, that the predator operates in various markets, whereas the prey operates in fewer markets, concentrated markets, slow entry, few fringe firms, homogenous products and numerous buyers. Posner would authorize the firm to defend due to changes in supply or demand, allowing the respondent firm to price its products at short-run marginal cost.