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Contrast with firm in perfectly competitive market
Most of the analysis here can be transferred to the perfectly competitive case, with the following change: the marginal revenue curve is replaced by a horizontal curve at value equal to the market price.
 
==Law of one price assumption and price discrimination==
 
In the discussion here, we assume the [[law of one price]], i.e., that the firm must offer a single price to all those buying from it. In other words, we assume that it is impossible for the firm to practice [[price discrimination]], i.e., charge different prices to different buyers.
 
If the firm can practice price discrimination, the analysis changes considerably. The key significance is that with price discrimination, the firm can charge higher prices for buyers with higher [[reservation price]]s and thus avoid to some extent the trade-off between expanding its market and lowering its price.
==Cost and revenue definitions==
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