Game Theory Analysis of E-Commerce’s Price War

Abstract

Home appliance industry is one of the most competitive industries in China, but the price war also prolonged. The reasons for E-commerce price war of home appliance industry are various; this article attempts to use the game theory and information economics analysis method to discuss the form of competition pattern, and further study the possibility of price coordination behavior in the industry. The analysis to our enlightenment is that, in order to get out of the price war trap, and improve the industry competition level, home appliance enterprises must pay more attention to technology and product innovation. At the same time, E-commerce should be rational to marketing strategy; it could avoid market competition environment destruction, and loss of consumer confidence caused by excessive price war in the adverse consequences.