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Discounts :Monopoly Vs Competition

Do you agree or disagree with the following statement, "Only a competitor would offer discounts to selected customers, because a monopolist can always require his customers to pay full price." Carefully Explain.

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Before discussing whether discounts are offered by competitors only or can be offered by monopolists as well, we should understand that determines the price. In case of competition, price competition is common as the firms in this type of structure tend to sell as much output as possible. To do so they offer lower price or we can say offer discounts. In this was they are able to make normal profits only. In case of competitive firm ...

Solution Summary

Solution studies the behavior of monopolist firms towards discounts.