The competitive landscape is a significant factor that affects the pricing elasticity of a product or service ¹. The level of competition in a market directly impacts pricing elasticity in the following ways:

- *Highly Competitive Market*: In a highly competitive market, businesses have limited pricing flexibility. This is because customers can easily switch to alternatives, leading to a high price elasticity. As a result, businesses need to be cautious when setting prices to remain competitive and retain their market share.

- *Less Competitive Market*: In a less competitive market, businesses have more flexibility when setting prices. This is because customers have limited alternatives, resulting in a lower price elasticity. Businesses can set higher prices without a significant impact on demand.

- *Monopolistic Market*: In a monopolistic market, there is only one firm that dominates the industry. As a result, there is limited or no competition, and the demand for the product or service is less elastic. This means that businesses can set prices without worrying about customers switching to alternatives.

- *Brand Loyalty*: The degree of brand loyalty also affects price elasticity. If a company has successfully built a strong brand image and has a loyal customer base, the demand for its products becomes less elastic. Consumers who are loyal to a particular brand are often willing to pay a higher price for the perceived value and quality associated with that brand.

- *Pricing Strategies*: Pricing strategies can also be influenced by market conditions and price elasticity. For example, firms operating in markets with elastic demand may choose to adopt a price skimming strategy, where they set a high price to capture the maximum revenue from consumers who are less price-sensitive. As demand becomes more elastic over time, the firm can gradually reduce the price to attract more price-sensitive consumers.