- Capitalism and Alternatives -

No price war

Posted by: DonS ( USA ) on November 24, 1999 at 13:18:52:

In Reply to: Again posted by Stoller on November 24, 1999 at 00:43:13:

: Don: So you think they will maintain that price if NO ONE wants the product?

: Obviously NOT---they will lower it, perhaps so far they no longer make a surplus or even their constant + variable.

: Then they will LEAVE the market to those who CAN make a surplus---or go bankrupt (same difference).

Don: Yes. But your belief that a price war would errupt in the original "candy bar" scenario is not correct. If there is sufficient demand, there is no reason to engage in a price war. Indeed, a price war would just eat into profits. The price war only makes sense if the market is saturated with candy (supply exceeds demand), and you need to undercut your competition to sell your product.

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