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Right. The two extremes are perfect competition and monopoly. The truth lies somewhere between the two. In both cases supplier costs affect price

• ncmncm 5y ago
  No. At monopoly, cost has zero effect on price. Except, the cost of a substitute might, where the substitute participates in a real or regulated market. So, price under a rail monopoly may be bounded by the cost of trucking.
  • Dylan16807 5y ago
    > No. At monopoly, cost has zero effect on price. Only if that monopoly is actively being substantially abused. If you're only slightly taking advantage of a monopoly, then your price is mostly tied to normal supply and demand rules.
    • ncmncm 5y ago
      Price might be depressed below "whatever the market will bear" by trying to be a less attractive target to potential competition, or to fend off anti-trust enforcement. But those are not driven by your own costs.
      • Dylan16807 5y ago
        If you're fending off antitrust enforcement, then you're likely trying to price things as if you had no monopoly. Which means you base the price off of cost and demand, like a normal product.
        • ncmncm 5y ago
          Then, you are in a regulated market, and are not a monopoly, but a public utility.
          • Dylan16807 5y ago
            Or you're just trying to not be a target. Which applies to both potential government involvement and potentially making your customers angry.
  • bko 5y ago
    Please see the link I attached in my first post. Again, what I'm saying is pretty basic well accepted economics. Think about it in the extreme. Suppose the cost to produce the product goes up above the current price. Obviously the price will have to go up. Or imagine the cost goes to nothing. Then depending on the elasticity of demand, you might make more money selling more for a lower price. Stop trying to reinvent economics. http://www.sanandres.esc.edu.ar/secondary/economics%20packs/microeconomics/page_122.htm http://www.sanandres.esc.edu.ar/secondary/economics%20packs/...