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Economic Definition of price leadership. Defined.

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Term price leadership Definition: A method used by a group of firms in the same market (typically oligopoly firms) in which one firm takes the lead in setting or changing prices, with other firms then following behind. The lead firm is often the largest firm in the industry, but it could be a smaller firm that has just historically assumed the role of price leader perhaps because it is more aware of changing market conditions. While price leadership is totally legal, it could be a sign of collusion, particular implicit collusion, in which the firms have effectively monopolized the market.


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