Question

Three separate oligopolists in the same industry serve a city. company a is the dominant firm in the industry and produces a large share of the total output in the industry. companies b and c are rival firms, but they are much smaller than company

a. company a sets its price at a level that maximizes its own profits.according to the theory of price leadership, what will companies b and c likely do?

Answer 1

Companies should follow the leading company prices.

Step-by-step explanation:

Oligopoly is a market structure in which few companies dominate a given market. In the above case, company a (leader) has greater market power than the other two competitors (b and c). Companies will maximize their interest, as the company has the most market power, others will determine their prices based on leading pricing decisions.

Answer 2

For the answer to the question above, I think the answer is that
companies b and c should set their prices that match the price of Company A.

I hope my answer helped you. Have a nice day ahead of you!