If a firm perceived that the other firm in an implicit pricing agreement dropped its price in an attempt to gain market share then its most likely response would be to

Question

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When a firm perceives that another firm in an implicit pricing agreement has dropped its price to gain market share, it is likely to engage in a price war as a response. This involves lowering its own prices to compete for market share and deter the other firm from further price reductions.

If a Firm Perceived That the Other Firm in an Implicit