What factors are ascribed to the decline in popularity of the price-leadership strategy?
What will be an ideal response?
The price-leadership strategy prevails in oligopolistic situations. The leader makes the pricing moves and is acknowledged by others in the industry. However, unfavorable conditions have led to turning away from price leadership. In the 1980s, with increasing competition from overseas, the price-leadership strategy did not work in many industries. Automatic response by competitors assumes similar positioning vis-à-vis price variables/cost, competition, and demand. Such an assumption, however, is far from being justified. The leadership strategy, according to an economist, is an artificial way to force similar pricing responses throughout the industry.
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