Oligopoly Price War - Asda Follows Morrisons

Interesting, very interesting. Asda have followed the news the Morrisons is cutting prices, by announcing price cuts of their own. This is classic oligopoly theory in action.

It might also indicate something about market segmentation and the nature of competition in the sector: if Tesco and Sainsburys don't follow suit, perhaps it highlights the fact that Asda and Morrisons are closer substitutes (or in more direct competition). One suspects that Waitrose are unlikely to cut their prices in response, and the discounters? Well, that's just what they do.