Price/Output Equilibrium. Suppose Target Stores, Inc., sell RainAway, an innovative product with polymers used to coat the windshields of cars, planes, and boats. RainAway makes windshields and other such surfaces slick enough for rain to slide off easily. In the case of windshields, RainAway makes it possible to avoid the use of windshield wiper blades except during the most torrential downpours. During recent years, RainAway has used its unique windshield coating product to successfully exploited a small but profitable niche in the market. However, RainAway's monopoly position in this market niche is now threatened by a competitor's announcement of a new product with capabilities similar to those of the RainAway product.

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The Answer of Price/Output Equilibrium. Suppose Target Stores, Inc., sell RainAway, an innovative product with polymers used to coat the windshields of cars, planes, and boats. RainAway makes windshields and other such surfaces slick enough for rain to slide off easily. In the case of windshields, RainAway makes it possible to avoid the use of windshield wiper blades except during the most torrential downpours. During recent years, RainAway has used its unique windshield coating product to successfully exploited a small but profitable niche in the market. However, RainAway's monopoly position in this market niche is now threatened by a competitor's announcement of a new product with capabilities similar to those of the RainAway product.