Eco550 Wk6

ECO550 WK6 DQ1 University Name Course Tutor Date ECO550 WK6 DQ1 Monopolies A comp all(prenominal) acting as a monopoly is unrivaled that controls the entire mathematical product (Richard, 1992). This ac society does not have any rivalry whatsoever. The connection determines the price of its products, nevertheless the let onput to uprise. The openhanded bequeath in production and pricing is derived from the fact that in that localisation principle is no competition. The economies of scale of such a phoner, makes it to always present to maintain the monopoly status. When there is a saucy competitor in the market place, the telephoner has to adjust its pricing strategy to each maintain its customers and profits, or force the parvenu competitor footfall forward of the market. There are several ways in which the friendship can change its pricing strategy. On the fore, the company whitethorn decrease its price to very dispirited levels that the new bl ind drunk cannot cope up with the price war. This is and in the neat run so as to apparent movement the competitor out of the market. The existing company has the capacity to produce more and graceful the increasing demand of its products. Since the latter company is joining the market for the first time it will not be commensurate to charge low prices. Decreasing the product price whitethorn not be the better excerption if the new steadfastly comes with novel ideas and highschool quality products.

another(prenominal) approach is that the company may opt for price discrimination. price discrimination is a situation where different consumers in exc! lusively different markets are charged different prices. This may invent for the competition, since the new may not have established in all areas. The company may lower their prices where the competitor has full(a) coverage, and charge high prices in area where it still operates as a monopoly. When new competition completely enters the market in the long run, the company has to strategize on its efficiency. Monopolies generally produce low output as compared to the market demand, and charge high prices for their products. In most cases...If you privation to get a full essay, severalise it on our website: OrderCustomPaper.com

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