A situation in which one firm sets the price and other firms in the industry match it is known as:
A)a Nash equilibrium.
B)price leadership.
C)Cournot competition.
D)price competition.

Question

Quizplus · Accepted Answer

Price leadership is a situation in which one dominant firm sets the price and other firms in the industry follow suit. This can happen either because the dominant firm has a large market share or because it is viewed as being particularly efficient in setting prices. The other firms in the industry may match the price of the price leader in order to maintain their market share or to avoid losing customers to the price leader. This type of pricing strategy can be seen in industries such as airlines, where one major carrier may set the standard for fares that other carriers in the industry then match.

A Situation in Which One Firm Sets the Price and Other