英国Assignment代写:为什么企业要从事价格战 [2]
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论文字数:2000论文编号:org201610160848335119语种:英语 English地区:英国价格:免费论文
关键词:英国Assignment代写企业管理价格战
摘要:本文是英国assignment代写范文,主要内容是讲述价格战的基本内容,以及企业加入价格战的原因包括价格战对企业所带来的一系列影响。
ct differentiation in a number of goods is not very evident price becomes one of the most important customer decision points (Exhibit 1). Firms try to reduce the price of goods / services to attract a larger customer base with the low price acting as a penetration price helping the firm gain greater market share. Niche industries or those with high product differentiation are less susceptible to price manipulations while industries with low capacity utilization and a declining demand or where a few large customers have the ability to influence prices are more prone than others to price wars (Exhibit1).
Economists provide a number of reasons for price wars to exist. Many companies across industries have avoided competition by working collaboratively as cartels to raise prices and profits. Stigler (1964) argued that cartel profits induce cheating or entry. This in turn leads to a price war, and the collusion disintegrates as was evident in the bromine price wars (Margaret Levenstein, 1997). While some cartels succeed, others fail due to misjudgment of competitor reactions, inability to monitor competitor price and output levels, incorrect interpretation of market information, entry of new market players or as a result of technological changes. The threat of price wars has been used by cartels to induce individual firms to cooperate and join the cartel (Friedman, 1971); while at times it has been used by firms as an instrument to punish and to keep their profitability secure. On the other hand, game theorists have argued that price wars may be necessary for cartel stability, and that they occur in response to exogenous shocks(Green and Porter [1984], Abreu, Pearce, and Stacchetti [1986] . Julio J Rotemberg and Garth Saloner (1986) support a contrarian view that price wars arise from business cycle fluctuations even with perfect information.
Oligopolistic markets witness greater price wars as the competitor firms can keep a close watch on the price at which other firms are selling their goods/ services. Within a set of oligopolists, price war signifies a change in strategy and non cooperative behavior. In the airline industry price wars occur when there is idle capacity and low demand, however due to cyclical nature of the industry where demand fluctuations are common, price wars also occur both during low and high demand periods (Saloner, 1986; Haltiwanger and Harrington, 1991). In response to price cuts, competitors reduce their prices further to attract customers, thus marking the beginning of a downward price spiral. Dominant firms that are cash rich resort to predatory pricing to create barriers to entry and by creating an 'artificial' competitive environment for the new entrants to drive them out whereas , in the case of financially weak firms the cost of present gains through increased sales outweighs the erosion of future value that a price war may bring to it .
It is mistakenly believed that all price wars are generally started by the lowest priced competitor; even highest priced suppliers can start price wars as part of their business strategy. In a stable market share environment the 'perceived benefits to price relationship' can be expressed linearly with customers able to choose price points for the benefits they desire. However, in unstable market share environments this equilibrium is disturbed by the share gainers through perceived value enhancement of the product or service at sa
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