Firm Behavior in Monopolistic Markets
The optimality condition “marginal costs = marginal revenues” characterizes the optimality condition only in a monopolistic but not in a perfectly competitive market.
Assume a non-price-discriminating monopolist who faces a decreasing demand function. Marginal revenues can be decomposed into a price and a quantity effect, and the price effect is always smaller than the quantity effect.
Assume a non-price-discriminating monopolist. Marginal revenues consist of a price and quantity effect. The price effect is always larger than the price effect under perfect competition.
If a firm owns a patent for a product, it can enforce prices above marginal costs, because the patent leads to a monopoly.