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Comparing Sources of Market Power
A pharmaceutical company holds a patent for a new life-saving drug, allowing it to set a high price. In a different market, a regional water utility company is the sole provider for a town, and its pricing is regulated to cover its massive infrastructure costs. Compare and contrast the primary source of market power for the pharmaceutical company and the water utility. In your answer, explain how each source allows the respective firm to price its product above the direct cost of producing one additional unit.
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Economy
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