What is price leadership in an economy?

Price leadership in economics is the process in which the usually dominant companies set a price for a product; these prices are followed by companies that sell similar and competing products. Typically, the dominant business has low production costs, which allows it to set prices lower than competing products and businesses. Competing products or businesses will then need to meet these prices in order to remain competitive but still profitable. For example, when you are driving in a city, a person usually sees that gas price change is possible by a few cents, the dominant gas company will set prices, followed by other gas stations or gas companies.