Examples of price war in the following topics:
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- They don't have the resources to survive a price war or the ability to claim better quality to charge a higher price.
- Price wars are intense competitive rivalries characterized by a multilateral series of price reductions.
- In the short term, price wars are good for consumers, who can take advantage of lower prices.
- A small firm can avoid a price war by setting prices in line with its competition.
- Walmart and Amazon are engaged in a price war with online books.
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- Competition-based pricing describes a situation where a firm has a pricing policy that reflects the pricing decisions of competitors.
- Competition-based pricing describes the situation where a firm does not have a pricing policy that relates to its product, but reflects the pricing decisions of competitors.
- It can lead to price wars.
- Instead of setting market share objectives, firms should focus on identifying the most profitable segments to serve, and finding ways of profitably serving them while protecting themselves from price wars.
- Show the basis of competitor-based pricing as a general pricing strategy
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- In general, a business can price itself to match its competition, price higher, or price lower.
- Historically, one of the worst outcomes that can result from pricing lower than a competitor is a price war.
- Price wars usually occur when a business believes that price-cutting produces increased market share, but does not have a true cost advantage.
- Price wars are often caused by companies misreading or misunderstanding competitors.
- Typically, price wars are overreactions to threats that either are not there at all or are not as big as they seem.
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- Non-price competition involves firms distinguishing their products from competing products on the basis of attributes other than price.
- Since price competition can only go so far, firms often engage in non-price competition.
- It can be contrasted with price competition, which is where a company tries to distinguish its product or service from competing products on the basis of a low price.
- Firms will engage in non-price competition, in spite of the additional costs involved, because it is usually more profitable than selling for a lower price and avoids the risk of a price war.
- Its prices are low, but not necessarily the lowest.
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- During World War II, the federal government controlled the prices of goods, wages, and war-sensitive materials like fuel and steel.
- The functions of the OPA were originally to control money (price controls) and rents after the outbreak of World War II.
- It became an independent agency under the Emergency Price Control Act 1942.
- At the peak, almost 90% of retail food prices were frozen.
- Describe the role of the Office of Price Administration, the Office of Administrator of Export Control, and the War Production Board in controlling the U.S. economy during WWII.
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- A model of pricing based on 'rational' economic theory suggests that prices are set by the forces of supply and demand, and individual companies in a perfectly competitive market must follow the equilibrium price.
- Sometimes prices go up and people buy more, and vice versa.
- By knowing what value a company delivers to its customers, it can price more confidently and not panic into slashing prices when it does not necessarily need to.
- Price-cutting may even lead to price wars where nobody wins.
- Slashing prices on low value goods (while maintaining prices on high value goods) is a potential pricing strategy during difficult economic times.
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- A price ceiling is a price control that limits how high a price can be charged for a good or service.
- A price ceiling is a price control that limits the maximum price that can be charged for a product or service.
- By setting a maximum price, any market in which the equilibrium price is above the price ceiling is inefficient.
- For a price ceiling to be effective, it must be less than the free-market equilibrium price.
- Governments often impose price ceilings in times of war to ensure goods are available to as many people as possible.
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- Factors to consider in pricing include Economic Value added to Customers (EVC), competitor's pricing, and government regulations.
- The price of two servers from the competitor is $6,800.
- Price controls are governmental restrictions on the prices that can be charged for goods and services in a market.
- There are two primary forms of price control, a price ceiling, the maximum price that can be charged, and a price floor, the minimum price that can be charged .
- During World War I, the United States Food Administration enforced price controls on food.
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- A price ceiling will only impact the market if the ceiling is set below the free-market equilibrium price.
- This is because a price ceiling above the equilibrium price will lead to the product being sold at the equilibrium price.If the ceiling is less than the economic price, the immediate result will be a supply shortage.
- An effective price ceiling will lower the price of a good, which means that the the producer surplus will decrease.
- While the effective price ceiling will also decrease the price for consumers, any benefit gained from that will be minimized by decreased sales caused by decreased available supply for sale from producers due to the decrease in price.
- This is generally considered a fair way to minimize the impact of a shortage caused by a ceiling, but is generally reserved for times of war or severe economic distress.
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- Predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market.
- In the Darlington Bus War, Stagecoach Group allegedly offered free bus rides in order to put the rival Darlington Corporation Transport out of business.
- However, It is usually difficult to prove that prices dropped because of deliberate predatory pricing rather than legitimate price competition.
- Thus, they would not know predatory pricing is occurring.
- Low oil prices in the 1990's were considered a case of alleged predatory pricing.