Dominant Price Leadership

Topics: Pricing, Tamil Nadu, Collusion Pages: 9 (1629 words) Published: April 21, 2013

IUD No: 0901201057
IBS No: 09BS0001057

Course Code: SLEC501

Faculty Name: DR. ANIRVINNA C.
Date of Submission: 08TH SEPTEMBER 2009

Topic of the Assignment:


Student Signature                                                                 Faculty Signature


Dominant price leadership exists when
a. one firm drives the others out of the market.
b. the dominant firm decides how much each of its competitors can sell. c. the dominant firm establishes the price at the quantity where its MR = MC, and permits all other firms to sell all they want to sell at that price. d. the dominant firm charges the lowest price in the industry.

Marketing: Powerful firm whose prices are likely to be imitated by other firms in the same market. Price leaders usually are also the market leaders.


Leadership characterized by a clear line of authority that gives the leader the power of delegation, and the power to control the subordinates' level of participation in decision making process. It is the most common form of leadership.


Situation in which a market leader sets the price of a product or service, and competitors feel compelled to match that price.

Oligopoly Models “Price Leadership”

The firms in the Oligopolistic industry without any formal agreement accept the price set by the leading firm in the industry and move their prices in line with the prices of the leader firm. Price Leadership can be in any of the forms; Price Leadership by a Dominant firm Barometric Price Leadership Aggressive or Exploitative Price Leadership

The structure of the DTH industry in India can be categorized as an “Oligopoly”.

An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists).

An oligopoly is a market dominated by a few large suppliers. The degree of market concentration is very high. Firms within an oligopoly produce branded products and there are also barriers to entry.

Key characteristics of “Oligopoly” are following :

• Few larger supplier dominates the market
• Interdependence between firms
• Each firm produces branded products
• Significant entry barriers into the market in the long run which allows firms to make supernormal profits • Each oligopolist is aware of the actions of the others.

What is DTH?

DTH stands for Direct-To-Home television. DTH is defined as the reception of satellite programmes with a personal dish in an individual home.

DTH does away with the need for the local cable operator and puts the broadcaster directly in touch with the consumer. Only cable operators can receive satellite programmes and they then distribute them to individual homes.

Dishtv, subsidary of the biggest media conglomerate – Zee group, reached a significant milestone of crossing 4.5 Million subscriber mark and thus consolidating its leadership position as the largest and most innovative DTH Company in India. Dishtv is the leader in DTH sector with a market share of more than 53 per cent of the total subscriber base of 8 million. Dishtv’s footprint covers 5400 towns across India bringing smiles to 23 million Indians. Reliance communications subsidiary, Big TV, crossed one million subscriber mark within 90 days of launch. Big DTH is growing exponentially and is now next to Dish TV and Tata Sky with its 15 per cent market share. Launched in August this year, BIG TV is available at over one lakh retail outlets across 6,500 towns along with over 2,000 exclusive Reliance branded stores. Dishtv has consistently set the benchmarks for the Indian DTH industry and redefined the business through marketing innovations, introduction of new generation valueadded...
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