[imglorp]

Okay, poor examples?

How about quickie marts selling underpriced drinks in the back... but you usually end up buying other things on your way to the drinks that have the big margins. The drinks are probably undercutting other stores.

[munk-a]

I have less of an issue with this sort of an arrangement as the low saturation point for selling drinks means that the locality of the quickie mart already gives it a huge competitive advantage, under-pricing their drinks isn't likely to effect competitors - just spur on more sales as a sort of advertising.

That said if a drink stand (maybe a food-cart) was unable to match the prices offered by a quickie mart because they were selling at a loss - then I think we've returned to a situation where loss leading is creating a barrier to market entry.

The quickie mart is a really good example (I also like toy stores that sell cheap diapers to try and leverage free eyeballs as they pass through the store) where the market has a very low natural level of competition and there aren't as many specialized sellers - I think in these cases a loss-leader could be permitted on a small scale, but still be held subject to legal action if the disparity started suppressing the local market.

(Also, sorry, I didn't mean to criticize the bank toaster example, I was actually quite amused by it, I've never heard that described as a loss-leader but it totally is)