question archive Why do gas stations next to each other avoid price wars?
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Why do gas stations next to each other avoid price wars?
Gas stations situated next to each often feel the need to adjust prices to attract customers but opt not to for the following reasons; the profit margins the gas stations enjoy currently will be eroded once they engage in a price war. The effect will be detrimental and will end up putting them out of business. Another reason is that the quality of products may be looked down upon by consumers since constant price reduction signals that the quality is low. Thus, enterprises can adjust prices anyhow. In the end, consumers will shy away from them and end up going to other gas stations to get fuel, fuel products and other vehicle services. Lastly, cutting down prices doesn't always spell increased revenue even when more customers choose a particular gas station as other gas stations will retaliate with even lower prices.