Price War

A price war occurs when competing businesses continuously lower their prices to attract more customers, aiming to gain market share. While this may benefit consumers initially, it can harm the companies involved by reducing profit margins and potentially leading to a race to the bottom, where prices become unsustainable. Over time, such competition can destabilize the market, discourage innovation, and may force some companies to exit the industry. Price wars often arise in highly competitive markets or during economic downturns, requiring businesses to carefully balance competitive pricing with long-term financial health.