General Principles of Price Setting in Competitive and Monopolized Markets

Abstract

The author uses microeconomic approach to compare optimal price, input and output quantity setting for a firm in a competitive industry and with market power. Revealed profit maximization principle is applied to draw a conclusion that production technology plays a fundamental role in cost determination for a monopoly and a competitive firm. Production technology is a key factor that promotes both centrifugal, contending and centripetal, integrative trends in a modern economy.