Price Maker

What is a 'Price Maker'

A price maker is 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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RELATED FAQS
  1. What are the characteristics of a monopolistic market?

    Learn about monopolistic markets and specific descriptions of the main characteristics that distinguish a monopolistic market ... Read Answer >>
  2. What is the difference between a monopolistic market and perfect competition?

    Learn about monopolistic and perfectly competitive markets, what they are, and the main differences between perfect competition ... Read Answer >>
  3. What is the difference between a monopolistic market and monopolistic competition?

    Learn about monopolistic markets and monopolistic competition and the main differences between monopolistic markets and monopolistically ... Read Answer >>
  4. Why are monopolistic markets inefficient?

    Find out why general equilibrium economic models suggest monopolistic markets can lead to inefficiencies and why some economists ... Read Answer >>
  5. What are common examples of monopolistic markets?

    Discover what causes real instances of market monopoly, how it persists and where monopoly privilege is most common in the ... Read Answer >>
  6. How is profit maximized in a monopolistic market?

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