Price Wars

Companies in the food and agriculture industry use pricing strategies to gain an upper hand in the marketplace. A price war ensues when companies repeatedly set their price below that of their competitors. The back-and-forth price war may continue to the point that firms sell their products or services at a loss, potentially forcing them to shut down. While some companies may benefit from a price war, a long-term price war is likely to be detrimental to both consumers and producers. This entry focuses on the causes, impact, and strategy of firms involved in a price war and provides several examples.

Causes of Price Wars

Commodity suppliers, food processors, grocery stores, financial institutions, and agricultural input suppliers may all lower prices in an attempt to increase their ...

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