King Rat (gkr) wrote,
King Rat

Eco 200: reducing prices for customers or monopoly

(individual) What is the difference between reducing prices to attract more customers and reducing prices in order to monopolize?

Only in intent. If the intent is to be able to raise prices again later once competition is lessened, it's to monopolize. Of course, once prices are raised again, the opportunity for competition returns. It's somewhat self-correcting. If the monopoly never raises prices again, who cares if it's one business or two selling the product? There's still the opportunity to compete on differentiated product or on substitute product.


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