If you find yourself facing

by Akshay R. Rao, Mark E. Bergen, and ^ 1 1^ f Scott Davis War I N THE BATTLE TO CAPTURE THE CUSTOMER, companies use a wide range of tactics to ward off competitors. Increasingly, price is the weapon of choice and frequently the skirmishing degenerates into a price war. Creating low-price appeal is often the goal, hut the result of one retaliatory price slashing after another is often a precipitous decline in industry profits. Look at the airline price wars of r992. When American Airlines, Northwest Airlines, and other U.S. carriers went toe-to-toe in matching and exceeding one another's reduced fares, the result was record volumes of air travel-and record losses. Some estimates suggest that the overall losses suffered hy the industry that year exceed the combined profits for the entire industry from its inception. Price wars can create economically devastating and psychologically dehilitating situations that take an extraordinary toll on an individual, a com-