prijsoorlogen

Prijsoorlogen, known in English as price wars, describe a competitive phenomenon in which rival firms repeatedly lower prices to gain or defend market share. They are common in markets with homogeneous products, thin profit margins, and high price transparency, such as consumer goods, retail, and certain service sectors. Short-term price reductions may be combined with promotions, coupons, and loss leaders, while longer-run strategies may involve deep discounting, wide-scale promotions, or cross-price competition across channels.

Price wars can erode profits across a sector and may lead to market consolidation as weaker players exit or are acquired. They can also harm consumers through price volatility, reduced quality investment, or less product variety if firms retreat from innovation to preserve margins. In some cases, aggressive discounting can trigger a cycle of undercutting that is difficult to halt once started.

Causes include excess capacity, market saturation, entry of new competitors, price triangulation where firms undercut each other, and strategic responses to perceived capacity to sustain margins. In the short term, consumers benefit from lower prices; in the long term, price competition can reduce incentives for product improvement and customer service.

Firms may adopt non-price competition strategies (differentiation, branding, better service) to avoid destructive price wars, or engage in capacity management and other tactics to maintain profitability. Regulators monitor pricing practices for potential predatory pricing, where aggressive cuts are used to drive competitors out of the market, potentially enabling later price increases.

See also predatory pricing, competitive strategy, price discrimination.