Who said anything about giving away money ? The issue is about dropping PRICES.
You’d only be giving away MONEY if your lower prices failed to increase the QUANTITY of your sales. Sellers in a free market drop their prices to increase market share, and the larger volume at the lower price gets them MORE MONEY, not less. Only through price-collusion can a market comprising many sellers maintain high prices. You can’t stop the other guy from being first to drop prices, which means you have to follow or go out of business.
No, it doesn’t. Price wars are a death spiral, and everyone always thinks the other guy is going to go away first.
Anyone whose first method of competition is price cutting won’t be in business long.
Wal-Mart thrived because they were in rural towns, made money and grew. They dominated when they came to suburbia; but their margins are horrible, and ownership makes their living from another corporation which gets rent from Wal-Mart stores.