Price leadership occurs when one or more dominant firms set pricing practices that other firms in the market follow.

Question

Quizplus · Accepted Answer

Price leadership is a real-world example of non-collusive oligopoly where a dominant firm in the market sets the pricing strategy, and other firms adjust their prices accordingly. It is the most common mechanism by which prices are coordinated in oligopoly markets. Therefore, the statement is true.

Price Leadership Occurs When One or More Dominant Firms Set