Types of Price Competition

• What are the types of price competition?


  • Price wars
  • Predatory pricing
  • Limit pricing
• What is meant by price wars?


  Fierce competition where firms continuously lower prices to gain market share often resulting in reduced profits for all.
• What is meant by predatory pricing?


  Occurs when a firm sets competitors out of the market, after which it can raise prices.
• What is mean by limit pricing?


  A strategy where a dominant firms sets pries low enough to discourage new entrants from the market.