Growth and power
Why do firms want to grow?
As they get larger they get stronger. They start to eliminate competition, and start to gain control of the market. They move from being a 'price taker' in a situation of perfect competition towards being a 'price setter' (or price maker) in a monopoly situation.
A price taker is a firm which cannot influence the price of the product on the market. If it puts its price above the one ruling in the market it sells little or none. Firms in perfect competition are price takers.
A price setter (or price maker) is a firm that can determine or fix the price of the product on the market. It sets the price, but the quantity sold is determined by the demand curve.
Firms start to develop monopoly power as they grow and increase their market share.
The power, or ability to influence a market, influence the survival of others, and establish the price. It enables it to increase profits.
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