Legal Definitions - price war

A price war is a situation where companies in the same industry, especially retailers, engage in a period of sustained or repeated price-cutting. The goal is to undercut competitors and gain a larger market share. This can lead to a decrease in profits for all companies involved and can even force some out of business.

One example of a price war is the competition between airlines. Airlines often lower their prices to attract more customers, but this can lead to a decrease in profits for all airlines involved. Another example is the competition between grocery stores. If one store lowers their prices, other stores may follow suit, leading to a decrease in profits for all stores involved.

Price wars can be harmful to businesses and consumers in the long run. While consumers may benefit from lower prices in the short term, the decrease in profits can lead to lower quality products and services, as well as fewer options in the market.