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What is a Price War?

 , updated on January 13, 2016
A price war is intense price competition between two or more competitors in a market. It is characterized by retaliatory price cuts that may escalate until prices fall below costs for some competitors. As such, it can result in competitors dropping from a market.
Overview: Price War
Type
Definition
A series of retaliatory price cuts by two or more competitors in a market.
Implications
A limited price war can be a sign of a highly functional market that is good for customers.
An intense price war can end with large numbers of competitors dropping from a market. The result can be reduced quality and less selection. In some cases, a price war results in significantly reduced competition and higher prices in the long term. For example, a monopoly can emerge from a price war.
Related Concepts

Pricing

This is the complete list of articles we have written about pricing.
Algorithmic Pricing
Bargaining Power
Benchmark Price
Commoditization
Price Fixing
Cost-plus Pricing
Equilibrium
Price Gouging
Customary Pricing
Decoy Effect
Everyday Low Price
Marginal Utility
Willingness To Pay
Dynamic Pricing
High-Low Pricing
Market Value
Flat Pricing
Loss Leader
Predatory Pricing
Price Discrimination
Snob Effect
Market Price
Price Competition
Price Leadership
Premium Pricing
Price Economics
Price War
Revenue Management
Veblen Goods
Price Floor
Price Promotion
Price Sensitivity
Price Skimming
Price Umbrella
Pricing Power
Pricing Strategy
Sticky Prices
Value For Money
More ...
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