Which condition is likely to intensify rivalry among competing firms?

The condition that is likely to intensify rivalry among competing firms is engaging in price wars to gain market share. When companies enter into price wars, they drastically reduce prices in an attempt to attract customers away from their competitors. This aggressive pricing strategy can lead to a cycle of undercutting, where each firm feels compelled to lower prices even further in order to maintain or increase their market share. Such conditions elevate competitive pressures and can erode profit margins for all involved firms, leading to a highly competitive environment.

In contrast, when rivals are satisfied with their market position, there’s generally less incentive to engage in competitive actions, leading to a more stable market situation. Similarly, slowly growing buyer demand tends to reduce the intensity of competition, as firms can grow without directly taking share from one another. High levels of product differentiation can lead to less direct rivalry because firms can target different customer segments based on unique features or benefits, creating niches that reduce the likelihood of direct competition over prices. Thus, price wars are a significant driver of intensified rivalry among firms.