Term:
Cut-throat competition
Definition:
Cut-throat competition, also known as destructive or ruinous competition, refers to situations when competition results in prices that do not chronically or for extended periods of time cover costs of production, particularly fixed costs.
This may arise in secularly declining or "sick" industries with high levels of excess capacity or where frequent cyclical or random demand downturns are experienced.
Domain:
Finance
Source:
Glossary of Industrial Organisation Economics and Competition Law, compiled by R. S. Khemani and D. M. Shapiro, commissioned by the Directorate for Financial, Fiscal and Enterprise Affairs, OECD, 1993