Price Maker

DEFINITION of 'Price Maker'

A monopoly or a firm within monopolistic competition that has the power to influence the price it charges as the good it produces does not have perfect substitutes.

BREAKING DOWN 'Price Maker'

A monopoly is a price maker as it holds a large amount of power over the price it charges.

A price maker that is a firm within monopolistic competition produces goods that are differentiated in some way from its competitors' products. This kind of price maker is also a profit-maximizer as it will increase output only as long as its marginal revenue is greater than its marginal cost, in other words, as long as it's producing a profit.

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