Lieme Inc. and Pola Inc. are oligopolistic rivals in the automobile industry. Lieme has staked out a price position that is slightly higher than that of Pola. Even so, if Pola raises its price, Lieme would too, in order to maintain the differential. Which of the following is being exemplified in this case?
A)Implementing an entry barrier
B)Limiting competitive access to scarce resources
C)Introducing new products frequently
D)Monitoring and mimicking rival behaviour

Question

Quizplus · Accepted Answer

The situation described exemplifies the strategy of monitoring and mimicking rival behavior, as Lieme is observing Pola's pricing decisions and adjusting its own prices accordingly in order to maintain its competitive edge. This is a characteristic behavior of firms in an oligopoly, where there are a limited number of competitors in the market and each firm's actions can have a significant impact on the others.

Lieme Inc and Pola Inc