The fear of unwanted price wars may explain why many firms are reluctant to "reduce prices when a decline in aggregate demand occurs."
A price war is an aggressive trade among adversary organizations who bring down costs to undermine each other. A price war might be utilized to expand income for the time being, or as a more extended term technique to pick up market share. Price wars can be averted through vital value administration (with non-aggressive pricing), an exhaustive comprehension of the opposition, or even correspondence with contenders.