price leader

Company, product, or service that is a leader in its market. As the leader it serves as the pricing benchmark for the rest of the market. When the price leader sets a price, all the other products in the market are priced according to their position relative to the price leader. This pricing policy leads to a stable market and avoids overcompetitive pricing. Some critics might argue this is not in the interests of the consumer. Although this pricing strategy is common, care must be taken by companies, especially in a mature market with a small number of large firms, not to cross the boundaries of accepted practice by forming a cartel and colluding over pricing.