Price Warfare in Business Competition: A Study of Abnormal Competitive Behavior

By Ralph Cassady | Go to book overview

CHAPTER VI
CONCLUSIONS

We have in the preceding chapters of this presentation brought together some findings regarding price warfare. We have defined the term in its technical sense, we have given some examples of competitor behavior and price patterns under price war conditions, we have distinguished between price warfare and some other intensive price competitive situations, and we have attempted to set forth some theoretical implications regarding the characteristics of price warfare from the empirical findings. It is hoped, therefore, that we have thus made some progress toward an understanding in broad terms of the topic under study.

There is left one final aspect of this study to be presented -- that of attempting to evaluate price warfare as it relates to the various groups affected by it and offering some recommendations as to what steps, if any, should be taken to control it. In pondering this problem we must consider first the impact of price warfare on various segments of society and, second, what the net advantage would be of controlling them.


IMPACT OF PRICE WARFARE

One may start by wondering whether any useful purpose is served by price wars. This question cannot be answered in general terms. One must determine first whose point of view is to be considered -- that of consumer-purchasers, competitive sellers, or society in general, and second whether short-run or long-run results are to be used as criteria. One must also distinguish between predatory wars and those which develop inadvertently out of normal competitive effort. It is only through such complex analysis that price wars may be effectively evaluated.

Since we are all consumers, it is perhaps natural to consider first the effect of price wars on consumers. Generally speaking, the ultimate consumer enjoys short-run gains from intensive price disturbances because of the availability of merchandise or services at lower than normal prices during such struggles. However, such an

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