What typically happens when rivals expect long-term benefits from their actions?

When rivals expect long-term benefits from their actions, they are often motivated to adopt strategies that will secure a competitive advantage over time. One common response is to launch a counterattack, particularly if a rival has made a strategic move perceived as a threat. This might involve lowering prices, enhancing product quality, increasing marketing efforts, or other competitive strategies aimed at reinforcing their market position.

The anticipation of long-term benefits compels businesses to think beyond immediate gains and consider their future profitability and market sustainability. Engaging in a counterattack can be a calculated way to defend market share, deter competitors, and stabilize or enhance their standing within the industry.

In contrast, other options such as engaging in price wars may lead to short-term losses rather than the long-term benefits that firms are looking for. Similarly, collusion usually aims for immediate mutual gains rather than sustained actions and can carry legal risks. Increasing market share might occur as a result of successful counteractions but is more of a consequence rather than a proactive move based on the anticipation of long-term benefits. Therefore, launching an effective counterattack aligns well with the expectation of gaining sustained advantages in a competitive market.