economic impact of price wars

Price wars occur when competing businesses repeatedly lower prices to attract customers, which can benefit consumers through lower costs in the short term. However, they often lead to reduced profit margins for companies, making it harder for them to invest in quality, innovation, or even stay afloat. Over time, this intense competition can cause some businesses to exit the market, reducing choice and potentially leading to monopolies. Additionally, widespread price wars may distort fair market values and discourage sustainable business practices, ultimately harming economic stability and growth across industries.