Price leadership can be positive when the leader sets prices higher, since its competitors would be justified in ratcheting their prices higher as well, without the threat of losing market share. In fact, higher prices may improve profitability for all firms.
More commonly, undisputed market leaders such as the big-box retailers use their operating efficiencies to relentlessly mark down prices. This forces smaller rivals to lower prices as well in order to retain market share. Since these smaller firms often do not have the same economies of scale as the price leaders, this attempt to match the leader's prices may lead to mounting losses over a prolonged period, to the point where they may be forced to eventually close their doors.
Investment dictionary. Academic. 2012.
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price leadership — A price charged by the dominant producer that becomes the price adopted by all the other producers. Bloomberg Financial Dictionary * * * price leadership price leadership ➔ leadership * * * price leadership UK US noun [U] ► MARKETING the fact of… … Financial and business terms
price leadership — noun : leadership by a dominant firm in the determination of prices in an industry with other firms following the pattern established by the leader * * * price leadership noun The establishment of the price of a commodity by the market leader • • … Useful english dictionary
price leadership — The setting of the price of a product by a dominant firm in an industry in the knowledge that competitors will follow this lead in order to avoid the high cost of a price war This practice is often found in oligopoly and has the effect of a… … Big dictionary of business and management
price leadership — Mktg the establishment of price levels in a market by a dominant company or brand … The ultimate business dictionary
Price Leadership — ⇡ Preisführerschaft … Lexikon der Economics
price leadership — / praɪs ˌli:dəʃɪp/ noun a situation where the producers model their prices on those of one leading producer … Marketing dictionary in english
leadership — lead‧er‧ship [ˈliːdəʆɪp ǁ ər ] noun [uncountable] 1. the position of being the leader of a team, organization, country etc: • The company did well under the leadership of its founder, Haruo Suzuki. 2. the qualities needed in order to be a good… … Financial and business terms
Price fixing — is an agreement between business competitors to sell the same product or service at the same price.In general, it is an agreement intended to ultimately push the price of a product as high as possible, leading to profits for all the sellers.… … Wikipedia
price — The cost at which something is obtained. Something which one ordinarily accepts voluntarily in exchange for something else. The consideration given for the purchase of a thing. Amount which a prospective seller indicates as the sum for which he… … Black's law dictionary
price ring — A group of firms in the same industry that have agreed amongst themselves to fix a minimum retail price for their competing products, thus forming a cartel Price rings are illegal in many countries unless they can be shown to be in the public… … Big dictionary of business and management