How a monopoly would likely change its pricing strategy when a new competitor arrive in the marketplace?
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When it comes to a monopoly, the managers should offer a pricing strategy based on establishing the highest possible price that a company can propose with no engagement in price gouging. Second, the monopoly’s price policies may also depend on governmental approval.
How the monopolist could be more efficient in the long-run considering new competition has entered the marketplace?
Because establishing the highest price possible is among the only options that a monopoly can afford, it has few chances to stand a competition due to the lack of products variety. However, the competitiveness of monopolies can be increased through deregulation of the policies allowing them to enter new markets. Second, improving labor dynamics can also contribute to enhancing a competitive environment.