ervice from another.
             William H. Thompson, CPA, states in his article "Economics of Accountancy: A Critical Analysis of Accounting Theory", written in The Accounting Review", "In a perfectly competitive market the price of a particular service is established solely by the interaction of market demand and supply. When market demand for accounting services increases the resulting demand shifts right causing prices to increase returning the market back to equilibrium. However when supply increases, such is the effect of adding advertisement to public accounting practice, the supply curve shifts right causing prices to fall" (Thompson 485).
             The model of monopolistic competition is also price sensitive, however only at the firm level. For example, the CPA firm of Fake Inc. has an established clientele base and uses referrals as its sole means of growth. Thompson concluded, "They increase prices only as their cost of providing the service increases and therefore are able to maintain their client base. In this example a gently down-sloping demand curve exists" (Thompson 486). This causes only drastic changes in pricing to send their client base shopping for a new firm. The result is Fake INC. can continue to grow by practicing fair pricing and providing a reputable service. Cut rate pricing only marginally effects their client base because there is little means to make their pricing publicly known, and only drastic, unwarranted increases sends clients packing.
             Conversely, in the post-advertising era, Fake INC. must always be aware of market pricing because the demand curve is steeper and more volatile. Therefore the client base of Fake INC. is not stable as in the previous example and
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