ability of a company to raise prices to a level higher than the general market price and maintain the high price over a significant period of time
In
economics, market power is the ability of a firm to alter the
market price of a good or service. A firm with market power can raise price without losing all customers to competitors.When a firm has market power it faces a downward-sloping
demand curve.In
perfectly competitive markets, market participants have no market power. A
firm with market power has the ability to individually affect either the total quantity or the prevailing price in the market. If the
demand curve is downward sloping (that is, the most common situation where price increases lead to a lower quantity demanded), then the decrease in supply as a result of the exercise of market power creates an economic
deadweight loss in comparison with a situation of
perfect competition. This is often viewed as socially undesirable, and as a result, many countries have
anti-trust or other legislation with the aim of limiting the ability of firms to accrue market power. Such legislation often regulates
mergers and sometimes introduces a judicial power to compel
divestiture.
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the ability of a single/group of buyers or sellers to dominate a market.
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