limit price

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The highest price that established sellers in a market can charge for a product, without inducing a new seller to enter the market. The limit price is usually lower than the monopoly price but higher than the competitive price. Limit pricing enables established sellers to make higher profits than they would if they sold at the competitive price and it also ensures that new firms will not enter the market and drive the prices down to competitive levels.

Subjects: Business and Management.

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