Causes[ edit ] The main reasons that price wars occur are: Some products are, or at least are seen as, commodities.
Context[ edit ] Keynes left Cambridge University to work at the Treasury in He worked daily on financing the war effort during World War I. That disturbed many of the pacifist members of the Bloomsbury Group of which he was a member.
Lytton Strachey sent him a note in asking Keynes why he was still working at the Treasury. He considered that there should be a general forgiveness of war debtswhich, he considered, would benefit Britain. Lastly, Keynes wanted the US government to launch a vast credit program to restore Europe to prosperity as soon as possible.
His general concern was that the Versailles conference should set the conditions for economic recovery. However, the conference focused on borders and national security. Reparations were set at a level that Keynes perceived would ruin Europe.
Woodrow Wilsonthe President of the United Stateswho represented his country at the conference, refused to countenance forgiveness of war debts and US Treasury officials would not even discuss the credit program.
He returned to Cambridge and wrote The Economic Consequences of the Peace over two months in the summer.
Although a best seller, and highly influential, especially to those who already had doubts about the Treaty,  it has also been described as "a diatribe". When President Wilson left Washington he enjoyed a prestige and a moral influence throughout the world unequalled in history.
His bold and measured words carried to the peoples of Europe above and beyond the voices of their own politicians.
The enemy peoples trusted him to carry out the compact he had made with them; and the Allied peoples acknowledged him not as a victor only but almost as a prophet.
In addition to this moral influence the realities of power were in his hands. The American armies were at the height of their numbers, discipline, and equipment.
Europe was in complete dependence on the food supplies of the United States; and financially she was even more absolutely at their mercy. Europe not only already owed the United States more than she could pay; but only a large measure of further assistance could save her from starvation and bankruptcy.
Never had a philosopher held such weapons wherewith to bind the princes of this world. How the crowds of the European capitals pressed about the carriage of the President! With what curiosity, anxiety, and hope we sought a glimpse of the features and bearing of the man of destiny who, coming from the West, was to bring healing to the wounds of the ancient parent of his civilisation and lay for us the foundations of the future.Price war is "commercial competition characterized by the repeated cutting of prices below those of competitors".
One competitor will lower its price, then others will lower their prices to match. If one of them reduces their price again, a new round of reductions starts. In the short term, price wars are good for buyers, who can take advantage. In the short term, price wars are good for buyers, who can take advantage of lower prices.
Often they are not good for the companies involved because the lower prices reduce profit margins and can threaten their survival. In the medium to long term, price wars can be good for the dominant firms in the industry. The objective of this essay is to "use economic theory and illustrative examples to outline the circumstances under which a price war could come about and the likely consequences for the participating firms and their consumers".
A price war is a period in which multiple firms competing within the same market will react to the other firms lowering of price by lowering their own price.
They have . Conditions and Consequences of a Price War. Words Nov 17th, 6 Pages The objective of this essay is to "use economic theory and illustrative examples to outline the circumstances under which a price war could come about and the likely consequences for .
The e-book reader market price war was sparked by new entrants competing with Amazon's Kindle product.
The Kindle started at $ in , and now the Kindle is priced at $ for the lower-end model.