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Firms within this market structure are not price takers and compete based on product price, quality and through marketing efforts, setting individual prices for the unique differentiated products. [18] Examples of industries with monopolistic competition include restaurants, hairdressers and clothing.
A monopoly is a price maker, not a price taker, meaning that a monopoly has the power to set the market price. [ 14 ] The firm in monopoly is the market as it sets its price based on their circumstances of what best suits them.
Monopolistic competition is a type of imperfect competition such that there are many producers competing against each other but selling products that are differentiated from one another (e.g., branding, quality) and hence not perfect substitutes.
For example, it is difficult for firms to know the price elasticity of demand for their good – which determines the MR. [20] In interdependent markets, It means firm's profit also depends on how other firms react, game theory must be used to derive a profit maximizing solution.
A monopolist is the price setter, but it is also limited by the law of market demand. If he/she sets a high price, the sales volume will inevitably decline, if expand the sales volume, the price must be lowered, which means that the demand and price in the monopoly market move in opposite directions.
A seller offers three prices for variations of the same good or service: a "good" no frills version, a "best" premium version, and a "better" version in the middle. Invoking the Goldilocks principle , customers may choose the "better" version because they are willing to pay more than the "good" price, but they are not willing to pay for the ...
Platform / exchange. 30-day trading volume. Maker / taker fees. Binance < $1,000,000. 0.10 percent / 0.10 percent. Kraken. $0 – $10,000. 0.25 percent / 0.40 percent
In either case, the disadvantaged group is known as price-takers and the advantaged group known as price-setters. [23] Price takers must accept the prevailing price and sell their goods at the market price whereas price setters are able to influence market price and enjoy pricing power.