Price and Competition. As a low-cost price leader, the firm will imply that they provide the lowest cost. That is the strategy they have chosen. Walmart would be a good example. They offer many products as low cost compared to their competitors such as Target and K-Mart (before they left the market). Another thing Walmart did was created and developed its brand in different markets. A good example would be cereal. They created very similar products to well-known products such as Cheerios and Fruit Loops. They produced these products at a lower cost and sold these products at a lower cost. Thus, this was able to sway low-income families to purchase these products compared to the well-known, more costly products. That provides a good example of how to become the "low-cost" price leader.

This type of strategy works in an oligopoly where action from a firm initiates a reaction from another firm. Mainly because in an oligopoly, the firms are interdependent to each other. Continuing with Walmart as an example, Walmart lowers prices on their product and advertises them. Utilizing game theory to look at this, Target will see this and look to do the same so that Walmart does not take more market share. Initially, Walmart will make a profit, and Target will not. But when Target sets their price to match, then both Walmart and Target will make a smaller profit. The extra product being produced between the both of them will drive the price down. For them to make the most profit, they should cooperate and sell their product as an agreed price and quantity. Can you give a response to this post or any suggestion to improve my idea.