There are two main types of price leadership:

1. Dominant Firm Price Leadership:
   • In this case, one dominant firm in the industry takes the lead in setting the price, and other firms follow suit.
   • The dominant firm typically has a significant market share, and its actions are closely watched by other firms in the industry.
2. Barometric Price Leadership:
   • In barometric price leadership, no single firm is dominant, but one firm is still recognized as a barometer of the market.
   • This firm might be the first to adjust its prices in response to changes in costs or market conditions, and others in the industry follow its lead.

The reasons for price leadership can vary. It could be based on cost advantages, market share, product differentiation, or other strategic factors. Price leadership is often a way for firms in an oligopoly to coordinate their actions and avoid price wars, which could be detrimental to all firms involved.

Price leadership can be explicit or implicit. In explicit price leadership, the leading firm signals its pricing intentions to others, and they adjust their prices accordingly. In implicit price leadership, firms observe the actions of the leading firm and adjust their prices without any direct communication.

It's important to note that price leadership doesn't mean that all firms in the industry have identical prices. Rather, it implies that there is a recognized leader whose pricing behavior is influential, and other firms tend to align their prices based on the leader's actions.