Price war is a term used in the economic sector to indicate a state of intense competitive rivalry accompanied by a multi-lateral series of price reductions. One competitor will lower its price, then others will lower their prices to match. If one of them reduces their price again, a new round of reductions starts. In the short term, price wars are good for consumers, who can take advantage of lower prices. Often they are not good for the companies involved because the lower prices reduce profit margins and can threaten their survival.
In the medium to long term, price wars can be good for the dominant firms in the industry. Typically, the smaller, more marginal, firms cannot compete and must close. The remaining firms absorb the market share of those that have closed. The real losers then, are the marginal firms and their investors. In the long term, the consumer may lose too. With fewer firms in the industry, prices tend to increase, sometimes higher than before the price war started.
Read more about Price War: Causes, Reactions To Price Challenges
Other articles related to "price war, price, prices":
... having already taken pre-orders for the book at a heavily discounted price, sparked a price war two days before the book's launch by announcing they would sell it for just GB ... Other retail chains then also offered the book at discounted prices ... At these prices the book became a loss leader ...
... In an oligopoly markets prices can become 'sticky' because if the price rises, competitors will not follow the rise ... lose its market share to its competitors on lower prices ... But if the price falls, other players will merchants will follow suit if they can ...
... Atari was involved in what would soon develop into a full-blown price war when Jack Tramiel of Commodore International was attempting to undercut his old enemy Texas Instruments ... with the rest of the market, were dragged into "his" price war in order to maintain market share ... machines were too expensive to produce to be able to compete at the rapidly falling price points ...
... Reduced price tickets were only available seven days or more before departure, and only full-price tickets could be refunded ... At the same time, the maximum price increased to NOK 870, though all ticket prices were changed to include all taxes, after requirements from the authorities ... the whole year, Color Air had an average ticket price of NOK 453, giving a revenue of NOK 57 million ...
Famous quotes containing the words war and/or price:
“It is the women of Europe who pay the price while war rages, and it will be the women who will pay again when war has run its bloody course and Europe sinks down into the slough of poverty like a harried beast too spent to wage the fight. It will be the sonless mothers who will bend their shoulders to the plough and wield in age-palsied hands the reaphook.”
—Kate Richards O’Hare (1877–1948)
“I cannot think of punishing him ... merely for coveting that liberty for which we have paid the price of so much blood, and have proclaimed so often to be the right, and worthy pursuit of every human being.”
—James Madison (1751–1836)