AI set the price lower than cost intentionally?

[bycomet]

To capture my market share of compact camera, AI set the price to $90(normally its cost is higher than $300) for years and ignore its loss-making position.
Is this aggressive behavior originally designed in the game mechanism? I set AI's aggressiveness to very high.
And AI's start-up capital is more than mine as I set in the game option, I can not bear the loss like what AI does if I use the same price.
Do you have any recommendation to deal with this circumstance?

[azxcvbnm321]

What to do depends a lot on the health of your own finances and how important compact cameras are overall to your total sales. Do you have better technology than your competitors and are producing higher quality compact cameras? I would just let them take market share as each sale they make is a loss for them and set my own prices near break even. Continue to invest in technology R&D. The AI can only take so many losses unless it has many other profitable product lines so why don't you look at what else they are manufacturing and get into that business if it is profitable. Once you attack enough of their profitable businesses, they won't have the financial resources needed to continue price dumping compact cameras and will have to close some factories or raise prices.

If your brand and technology of compact cameras are much better than your competitor's, then they might be setting their prices low because they would not be able to sell their cameras at a higher price. People buy depending upon several factors, but one of the most important is the overall rating of the product, which includes price, quality, and brand. It may be that the AI can't do anything but lower price to be competitive. I've seen the AI sell at a loss before because they are so overmatched in the other two categories. Advertising for them makes little sense because it's an inferior product and they'd get negative brand loyalty. Usually the AI will break off at some point and exit the product line, but that could take time and it depends if there are other opportunities.

[counting]

Well, you can also referencing the Capitalism Strategies and Tactics Collections post I organized.

http://www.capitalismlab.com/forum/view ... =11&t=2010

A lot of the tactics are about price war, especially like "Second Chair" or "Freebie Grabber", even "Supply Raid". I believe the CapLab AI has been improved since the original Cap 2 came out. They are more resilient to temporary lost in profit in price war, as long as they still hold a majority of the market. Otherwise the old AI fell into the "freebie" trap too easily and got knocked out too easily if you nuke the price.