Not all markets are equal. Corn farmers like Jake take whatever the world price is — they have zero pricing power. Microsoft sets its own price for Windows with virtually no competition. The market structure determines how much pricing power a firm holds, how much profit it can sustain, and ultimately what multiple investors pay for its equity.

Four structures on a spectrum: Perfect Competition (many sellers, identical product, zero economic profit long-run, e.g. farming) → Monopolistic Competition (many sellers, differentiated product, e.g. restaurants) → Oligopoly (few sellers, interdependent, e.g. airlines) → Monopoly (one seller, full pricing power, e.g. patented drug). The Lerner Index = (P − MC)/P measures market power: 0 = perfectly competitive, 1 = pure monopoly.