Skip to main content

Why is the monopoly firm a price maker?

Since a monopoly is a company that has a good or service that no other company offers, monopolies are price makers by definition. A price maker is a business that can essentially set its own prices without considering how its competitors are pricing goods because the business does not really have any competitors in a particular market. For a firm to be a price maker, the good or service it is selling must not have a perfect substitute.


For example, a pizza restaurant is unlikely to be a price maker because most cities have more than one pizza restaurant, meaning those pizza restaurants must compete with one another for customers. As a result, they will work to lower their prices and/ or improve their products to attract customers, who tell the pizza restaurants what their preferences are based on which restaurant they choose to visit.


A modern-day company with a monopoly is Monsanto, which sells genetically modified seeds. Monsanto is very particular about making sure no one else sells genetically modified seeds that have the same formula as theirs. This monopoly on genetically modified seeds is a very profitable enterprise in the United States; Monsanto is a Fortune 500 company that does billions of dollars of business every year.

Comments

Post a Comment

Popular posts from this blog

Is there a word/phrase for "unperformant"?

As a software engineer, I need to sometimes describe a piece of code as something that lacks performance or was not written with performance in mind. Example: This kind of coding style leads to unmaintainable and unperformant code. Based on my Google searches, this isn't a real word. What is the correct way to describe this? EDIT My usage of "performance" here is in regard to speed and efficiency. For example, the better the performance of code the faster the application runs. My question and example target the negative definition, which is in reference to preventing inefficient coding practices. Answer This kind of coding style leads to unmaintainable and unperformant code. In my opinion, reads more easily as: This coding style leads to unmaintainable and poorly performing code. The key to well-written documentation and reports lies in ease of understanding. Adding poorly understood words such as performant decreases that ease. In addressing the use of such a poorly ...
Post a Comment
Read more

Is 'efficate' a word in English?

I routinely hear the word "efficate" being used. For example, "The most powerful way to efficate a change in the system is to participate." I do not find entries for this word in common English dictionaries, but I do not have an unabridged dictionary. I have checked the OED (I'm not sure if it is considered unabridged), and it has no entry for "efficate". It does have an entry for "efficiate", which is used in the same way. Wordnik has an entry for "efficate" with over 1800 hits, thus providing some evidence for the frequency of use. I personally like the word and find the meaning very clear and obvious when others use it. If it's not currently an "officially documented" word, perhaps its continued use will result in it being better documented.
Post a Comment
Read more