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
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  3. What are common examples of monopolistic markets?

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  4. What does it mean when a utility company has a natural monopoly on a market?

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