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What makes cutting price not a successful strategy in long run, as pointed out in the passage, is the possibility that competitors would make use of that strategy while the winner have to rise the fare. B weakens this by pointing out that new competitors predict the winner may employ the strategy again ----> that is to say, new competitors probably dare not to make use of the strategy.
This is just a never ending price war cycle in the airline industry. Once they drive away competitors, airlines jack up their fares until a new competitor enters the market, at which point they slash their prices again. The airline that can keep operating with the lowest fares for the longest period of time (even at a loss) will eventually prevail.
[rss2posts title=The MBA Manual title_url=https://mbamanual.com/2016/11/22/mba-vs-mim-guest-post/ sub_title=MBA vs. MiM :3qa61fk6]Hey, guys! We have a great guest post by Abhyank Srinet of MiM-Essay . In a quick post and an...
[rss2posts title=The MBA Manual title_url=https://mbamanual.com/2016/11/21/mba-vs-mim-guest-post/ sub_title=MBA vs. MiM :2kn54ay1]Hey, guys! We have a great guest post by Abhyank Srinet of MiM-Essay . In a quick post and an...