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A breakdown in price leadership leading to successive rounds of price cuts is known as
A) limit pricing.
B) a price war.
C) informal pricing.
D) price discrimination.
Price Leadership
A market strategy where a leading firm sets prices that other firms in the market follow.
Price Cuts
A reduction in the selling price of goods or services, usually to stimulate demand or compete more effectively.
Price War
Successive, competitive, and continued decreases in the prices charged by firms in an oligopolistic industry. At each stage of the price war, one firm lowers its price below its rivals’ price, hoping to increase its sales and revenues at its rivals’ expense. The war ends when the price decreases cease.
- Examine the tactical actions of companies concerning pricing, production levels, and marketing within an oligopoly market structure.
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Learning Objectives
- Examine the tactical actions of companies concerning pricing, production levels, and marketing within an oligopoly market structure.
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