Hope and Henry compete in a local duopoly. Hope has noticed that every time she changes her pricing strategy, Henry follows her. This is an example of _____ by Hope.

Question

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This scenario is an example of price leadership, where one company (in this case, Hope) sets the price of products or services, and competitors (like Henry) follow suit. Price leadership occurs in oligopolistic markets where a few firms dominate, and one firm often leads in price changes, which the others then follow to remain competitive.

Hope and Henry Compete in a Local Duopoly