Suppose that three oligopolistic firms are currently charging $12 for their product. The three firms are about the same size. Firm A decides to raise its price to $18, and announces to the press that it is doing so because higher prices are needed to restore economic vitality to the industry. Firms B and C go along with Firm A and raise their prices as well. This is an example of:

Question

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Price leadership occurs when one firm, often the largest or most influential within an industry, changes its prices, and other firms in the industry follow suit to avoid price wars or maintain market stability. In this scenario, Firm A raises its price and the others follow, indicating price leadership.

Suppose That Three Oligopolistic Firms Are Currently Charging $12 for Their