Michael Weiss is a columnist for Foreign Policy, The Daily Beast, and NOW Lebanon. He is also a fellow at the Institute of Modern Russia where he is the editor-in-chief of The Interpreter, an online news and translation journal covering Russian foreign policy and the ongoing war in Ukraine.
Perfectly competitive firms are small in size in relation to the market size â and none of these firms control the market. A monopolist firm, on the other hand, is larger and controls the entire market for its industry. Monopolistic firms are price makers by virtue of their market control.
A monopolist can take market demand as its own demand curve. The firm is a price maker but it cannot charge a price that the consumers will not bear. A monopolist has market power which is the power to raise price above marginal cost without fear of losing supernormal profits to new entrants to a market. In this sense, price elasticity of demand acts as a constraint on the pricing-power of the monopolist.