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Monopolist escape trap

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Reference no: EM131298801

A monopolist selling a durable good may sometimes be unable to charge more than the competitive price, because it is in competition with itself. Having initially sold some units at a price P _ exceeding its Marginal Cost MC , at any point thereafter it will want to sell additional units at a slightly lower price P __ , and so on down to P = MC . Knowing this in advance, buyers will be unwilling to pay more than P = MC to begin with. How could such a monopolist escape this trap?

Reference no: EM131298801

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