Why companies want to keep their market share instead gaining more profit?

Question

Company have the ability to gain a huge profit by set their price on their product higher even only 5%. This company could probably lose market share by 10%, but still their bottom line profit could jump by more than 50%. Why these company would prefer 10% market share, instead 50% profit?


10 pts. for good or detailed answer.

Answer 1

To decrease competition. Why open your market to an upstart?

Answer 2

Not sure just how you doyour calculations and reach your conclusions. Depending on how much profit is involved in any given item, and how competitive the market is, they could gain even higher profit than that, or much less or even lose.

Are you familiar with the term price elasticity? It basically means how much will sales increase or decrease if the price is lowered or raised. If this number could be accurately calculated (which it can't except by making some assumptions) then businesses could set prices to make optimal profits.