The reason why weaker firms accept price leadership is that they
A) maximize profit that way
B) get an equal share of the market
C) can collude to eventually challenge the dominant firm
D) are protected from price competition
E) can lower their prices to increase market share without upsetting the price leader

Question

Quizplus · Accepted Answer

Weaker firms accept price leadership primarily because it protects them from price competition. By following the price set by the leader, they avoid engaging in potentially damaging price wars that could erode profits or force them out of the market.

The Reason Why Weaker Firms Accept Price Leadership Is That