The Rival Bakers

Two bakers on the same street both knew that if they kept prices fair, both would earn well. But each also knew that if he slashed prices while the other didn’t, he’d steal all the customers.

The first baker thought: “If I cut prices and he doesn’t, I win everything. If I don’t cut and he does, I lose everything. Better to cut.”

The second baker reasoned identically.

Both slashed prices. Both barely survived. The street that could have supported two thriving bakeries now supported two struggling ones.

Neither baker was foolish. That was precisely the problem.