contestada

Three separate oligopolists in the same industry serve a city. company a is the dominant firm in the industry and produces a large share of the total output in the industry. companies b and c are rival firms, but they are much smaller than company
a. company a sets its price at a level that maximizes its own profits. according to the theory of price leadership, what will companies b and c likely do

Respuesta :

They will Set prices to match Company A
According 
to the theory of price leadership, there will always be a company that become a market leader in determining the market's standard for acceptable price upon a certain product.
Usually, the most dominant company took this position because they had the capability to manufacture large quantity product to obtain cheaper price