Price Competition

If i slash my prices, my competitor might then respond by shing nars. And will both end up with lower profits? Yes, but that's exactly what price competition is meant to do. It's why profits go to zero in perfect competition. So customers like it. But if you own a business, it may not be a preferred way to complug. If your customers are pretty indifferent between what you are selling and what your rivals selling, then they're going to focus on the price you're offering them. Think i effect is like drinking a cup of coffee in a beautiful building or sulie case at milk or coffee roasters.