A price war occurs when competing businesses lower their prices to attract customers, often leading to a series of price reductions. This strategy aims to increase market share or eliminate competition, but it can also reduce profit margins for all involved. While price wars can benefit consumers through lower prices, they can be harmful to businesses in the long run. Companies may struggle to maintain profitability, and some may even go out of business if they cannot sustain the lower prices. Ultimately, a price war can disrupt the market and lead to less competition over time.