Apparently successful strategies should be "forgiving", meaning they can retreat from this price war, and "non-envious", meaning they can live with the next-door shop earning more.
Maybe they can get some publicity and get that area known as the pizza part of town, so they can both raise their prices and win.
There can be emergent, uncoordinated cooperation between competitors. If two both adopt similar policies of price matching, one can raise prices without consequence and the other will soon follow. It has come up on HN before... google really needs an ability to limit the search to a range of years.
http://en.wikipedia.org/wiki/Prisoners_dilemma#Strategy_for_...
Apparently successful strategies should be "forgiving", meaning they can retreat from this price war, and "non-envious", meaning they can live with the next-door shop earning more.
Maybe they can get some publicity and get that area known as the pizza part of town, so they can both raise their prices and win.