Suppose that three oligopolistic firms are currently charging $12 for their product. The three firms are about the same size. Firm A decides to raise its price to $18, and announces to the press that is doing so because high prices are needed to restore economic vitality to the industry. Firms B and C go along with Firm A and raise their prices as well. This is an example of:

Question

London Harper

Business

3 November, 16:18

Suppose that three oligopolistic firms are currently charging $12 for their product. The three firms are about the same size. Firm A decides to raise its price to $18, and announces to the press that is doing so because high prices are needed to restore economic vitality to the industry. Firms B and C go along with Firm A and raise their prices as well. This is an example of:

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Answers (1)

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Lesly Whitehead · Answer 1

Price Leadership

Explanation:

Oligopolistic firms are small firms more than two that are in a market for example airline business. Their is always dominant one whose actions influences the decision of others. For example the firm increasing the price is the dominant firm and by setting the to $18 from $ 15 the other firms have to follow suit to avoid losing their share of the market in this case firm B and C