Katowice Map Tourist Attractions on The basic idea of this approach is that market structure (i.e., the number of firms in a market, the degree of product differentiation, the cost structure, the degree of vertical integration, and so on) determines market conduct or pricing, research and development activities, investment, advertising, and so on. Market conduct then yields market performance that is measured by cost efficiency, price-cost margins, product variety, and innovation rates. One can think of a profit-maximizing MONOPOLY as a theoretical model relying on the structure-conduct- performance approach. Assuming that the monopolist maximizes profit by choosing the level of output, the first order necessary condition for a maximum implies that the percentage deviation of price from marginal cost be equal to the inverse of the absolute value of the price elasticity of demand. Strictly speaking, this EQUILIBRIUM condition does not imply anything regarding causality, however it seems natural to view causality flowing from the demand elasticity to the price, the cost margin. Katowice Map Tourist Attractions 2016.
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