In the market for hotel rooms in large metropolitan markets, the cost of a single night's stay can be several times higher than that of a similar room in a suburban market.If the market for hotel rooms is characterised by monopolistic competition, this difference in price can be partially explained by:

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In monopolistic competition, firms have some degree of pricing power due to product differentiation. In the case of hotel rooms, the differentiation may come from location, amenities, or other factors. The mark-up of price over marginal cost in large metropolitan markets can partially explain the higher prices for hotel rooms in these areas.

In the Market for Hotel Rooms in Large Metropolitan Markets