Price leadership occurs when the leading firm in a given industry is able to exercise sufficient influence in the sector to effectively determine the price of goods or services for the entire market.
There are three main models of price leadership: barometric, collusive and dominant.
Price leadership is commonly used as a strategy among large corporations.
There are certain economic conditions that make price leadership more likely to emerge in an industry, including a small number of companies in the industry, entry into the industry is limited, products are homogeneous, and demand is inelastic.