A technology company is the first to launch a unique, highly sought-after smartphone. For the first year, it is the only company selling this type of device. In the second year, four competing companies launch their own very similar smartphones. Based on this change in the market, what is the most likely impact on the original company's pricing strategy for its phone?

Coffee Shop Pricing Strategy

Pricing Power in Different Market Structures

A company that sells a generic, widely available product like bottled water is more likely to be able to set its price significantly above its production costs compared to a company that sells a unique, patented pharmaceutical drug.