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.