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Which factors increase the risk of a price war in a given industry? You may use...

Which factors increase the risk of a price war in a given industry? You may use airline industry as a point of reference; keeping in view present Covid-19 situation and its impact on airline industry.

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Answer #1

Factors like higher comoetition, threat of new entrants due to deregulated markets, higher rivalry and urge to become numer uno can all create price wars.

On airline industry this creates an unsustainable and unviable business as price wars erode profits largely though increases market share but eventually prices get below cost price and thus unfeasible to run business and forced to shut down causing duopoly or oligopoly markets.

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