price competition
Battling on cost
Price competition is rivalry between sellers based primarily on lowering prices rather than differentiating products, services, or brands.
Industries with standardized products—gasoline, airline tickets, generic drugs—tend toward intense price competition.
The supermarket chains engaged in fierce price competition, slashing margins to attract shoppers.
When price competition dominates, profit margins shrink for everyone.
- marginal costPer-unit production increase expense
- supply and demandPrice-determining economic forces
- duopolyTwo-seller market structure
- elasticityTendency to resume original form
- oligopolyFew firms dominate market
race to the bottom · game theory · free market · cartel · bargain hunting · quality · undercutting · economies of scale · service · niche markets · sunk cost · design · market segmentation · sticker shock · opportunity cost · bundling · loss leader · bottom line
- market rivalryrivalry, rivals, market share, market leader, business rivalry
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