What is a Price War?
A price war is an event whereby two or more companies continually lower prices to undercut each other.
How Does a Price War Work?
Airline companies are famous for their price wars. If Airline XYZ cuts the price of a flight from Los Angeles to New York from $800 to $700, Airline ABC, which is competing for business on that route, might cut its fare to $650. Airline XYZ might respond by lowering its fair to $625, and so on.
Why Does a Price War Matter?
Engaging in a price war is a competitive strategy, usually to capture market share. Falling prices tend to attract more customers. Some companies may choose to sell a product or service at a loss, however, in order to capture market share and outwin competitors. In some cases, this might lead to antitrust violations.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
When I was in college, I eagerly applied for a credit card. It seemed that financial freedom was mine. All I had to do was swipe! Unfortunately, I racked up a...
Read More →
Bernie Madoff created the largest investment fraud in U.S. history because people threw...
Read More →
Financial regrets? You've had a few, no doubt. And you're not alone. According to a recent Merrill Edge survey, there are about 25 million American households that have between $50,000 and...
Read More →
Looking to get a little more bang for your saved buck? Depositing your hard-earned dollars in an online bank might be worth a long look if you're seeking higher yields. Today, many of the...
Read More →
One of Johnny Carson's greatest characters was Carnac the Magnificent. Clad in a cape and giant feathered turban, the comic great pretended to prophesy the answers to secret questions. The...
Read More →
