What is the price line?
Price guidance occurs when the leading company sets the price for goods and services in a particular sector, then other companies in the field correspond to the price determined by this leader. This is usually common in oligopolistic markets. There are few companies on the oligopolistic market and can dictate the direction of prices. The price leader is usually a company that has the largest market share or the strongest customer base due to the quality of the goods. The pricing strategy can be considered a secret agreement in some markets. There are few airlines in many countries; This leads to a market leader that can dominate customers on the market. By determining the high price, the leader will dictate this practice to other companies. This sets a standard price for goods and airlines must obtain a high market share through services or other incidents because there is no price advantage. A secret agreement may occur if the management of prices does not like to increase operating costs.
The secret agreement is illegal in most countries. MakeThe oligopolistic market has been involved in a secret agreement, two or more market companies must agree to determine the arbitrarily high prices. This forces customers to pay prices over market value and does not receive any additional advantage from the products. Many oligopolistic markets face this control when the pricing strategy is evident. Government agencies usually have to enter and review business practices related to agreement and price management.
The benefits of price lines can be somewhat difficult to see. The company usually increases prices to compensate for higher operating costs. In the Oligopolistic Market, however, higher prices can indicate a larger value from individual products. This quality can make it difficult for competitors to create a product with appropriate quality and corresponding price. In the absence of the Collusion, consumers expect high quality of the product associated with high prices.
high prices are not equal to high profits. Companies with inefficient manufacturing models can suffer low profits or even losses when they cannot transfer high prices to profits. Oligopolistic markets can use high prices as a barrier to enter other companies. Companies that cannot enter the market and compete with current companies will not be able to function efficiently. This protects all companies on the current market and ensures that a set of prices will prevent the customer's share of other companies.