Firms' Leap-Frogging Investments Spark Intense Price Wars, Eroding Consumer Savings
The article presents a new model for competition between companies where they invest in technology to lower costs and outperform each other. The model shows that even if both companies start with the same production costs, one can invest first and gain a temporary advantage. This can lead to periods where one company invests more than the other, creating a price war. This challenges the idea that investing in technology is not beneficial in competitive markets.