Economics Oligopoly Questions
The price leadership model in oligopoly is a situation where one dominant firm, known as the price leader, sets the price for the entire industry. Other firms in the oligopoly then follow the price set by the leader. This model is based on the assumption that the price leader has a significant market share and is able to influence the pricing decisions of other firms. The price leader typically sets prices based on factors such as costs, market conditions, and competitor behavior. The other firms in the oligopoly then adjust their prices accordingly to maintain market stability and avoid price wars.