However, since the price is regulated by Tennessee Regulatory Authority, Piedmont Natural Gas cannot charge the profit maximizing price but has to accept the price set by the regulating authority.
In the supply chain there is supplier, manufacturer, distributor, retailer, and customer. The retailer forecasts customer demand and in the process adds to fluctuations already present in the pattern of demand.
in either downstream or upstream markets are closed out of the market they previously enjoyed.
In case of a monopolistic competition there are many consumers in a given market, and no single market has total control over market price, there are few barriers to entry and exit, consumers perceive non price differentiation, and the sellers have a
Walmart has had to evolve and adapt over the last fifty years as it experiences growth and changes in the market place.
Most retailers and wholesalers set their prices by using a markup. A markup is added to the price of a product in order to cover operating expenses and make a profit.
A company must price in line with what others are doing to gain sales. Or perhaps it is a specialty item, so the company has high costs and needs only to sell a small number of items. This is called skimming the market.
Finally, pricing plays an important role in achieving the strategic objectives of the company. Pricing has to be set for every product of the company. Different prices are set for different segments.
Set Price The firm has to finally set the price. This is of course dependent on the pricing strategy adopted by the firm.
- Increase entry barriers to potential competitors, for example, if the industry can gain sole access to a scarce resource. - Gain access to downstream distribution channels that otherwise would be inaccessible.