What is Market Power

In economics, market power refers to the ability of a firm to influence the price at which it sells a product or service by manipulating either the supply or demand of the product or service to increase economic profit. In other words, market power occurs if a firm does not face a perfectly elastic demand curve and can set its price (P) above marginal cost (MC) without losing revenue. This indicates that the magnitude of market power is associated with the gap between P and MC at a firm's profit maximising level of output. The size of the gap, which encapsulates the firm's level of market dominance, is determined by the residual demand curve's form. A steeper reverse demand indicates higher earnings and more dominance in the market. Such propensities contradict perfectly competitive markets, where market participants have no market power, P = MC and firms earn zero economic profit. Market participants in perfectly competitive markets are consequently referred to as 'price takers', whereas market participants that exhibit market power are referred to as 'price makers' or 'price setters'.

How you will benefit

(I) Insights, and validations about the following topics:

Chapter 1: Market power

Chapter 2: Duopoly

Chapter 3: Microeconomics

Chapter 4: Monopoly

Chapter 5: Monopolistic competition

Chapter 6: Oligopoly

Chapter 7: Perfect competition

Chapter 8: Imperfect competition

Chapter 9: Herfindahl-Hirschman index

Chapter 10: Anti-competitive practices

Chapter 11: Barriers to entry

Chapter 12: Monopoly profit

Chapter 13: Lerner index

Chapter 14: Market structure

Chapter 15: Market concentration

Chapter 16: Competition (economics)

Chapter 17: Edward Chamberlin

Chapter 18: Dominance (economics)

Chapter 19: Bilateral monopoly

Chapter 20: Profit (economics)

Chapter 21: Monopoly price

(II) Answering the public top questions about market power.

(III) Real world examples for the usage of market power in many fields.

Who this book is for

Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of Market Power.