MTZehvor on 04 December 2013
| ps4tw said: getting the biggest market share is essential now as thats the best advertising. spend money to make money |
Certainly, taking on deadweight loss is sometimes favorable for a company's prospects. The point here is that said loss is what gives companies room to move if there was no competition. If there was no concern about who had the bigger market share (only one company in the market), then companies wouldn't need to cut prices to get ahead in that department. They could simply charge the market price as set by supply and demand, whereas in a situation that involves competition, they willingly choose to go under.
