What if the product next to it doesn't go down? They didn't in Europe when businesses took advantage of the Euro switch to jack up prices.
To compare a tax structure to a currency swap is not apples to apples. And the American economy is far more competitive and free than the European economy and market.
It will ratchet downward because the competitor wants to maximize his revenue. This is because the competitor knows that if he lowers his price incrementally (say 1%), he will sell more products (2% more products, for example). The end result is more revenue for the competitor. This is exactly the invisible hand that regulates prices. Of course, this whole scheme breaks down if there is a "trust" or agreement between the two companys...but that would be illegal. I am not a economist, mind you.