Definition of Market power:
The ability to affect the price or quality of goods or services by dominating the market in either supply or demand.
Market power refers to a company's relative ability to manipulate the price of an item in the marketplace by manipulating the level of supply, demand or both.
Extent to which a firm can influence the price of an item by exercising control over its demand, supply, or both. Under the economic concept of perfect competition, all firms in a market are assumed to have zero market power. Thus, each firm has to accept the current market price without being able to exercise any control over it. In reality, however, in every market some firms do have varying levels of market power; firms with highly differentiated products having almost monopoly power.
A company with substantial market power has the ability to manipulate the market price and thereby control its profit margin, and possibly the ability to increase obstacles to potential new entrants into the market. Firms that have market power are often described as "price makers" because they can establish or adjust the marketplace price of an item without relinquishing market share.
How to use Market power in a sentence?
- Sometimes large corporations have too much market power , and they are able to bankrupt small businesses by lowering their prices to unbelievable and unmatchable levels.
- I knew the firm would be okay cause they had a lot of market power and could influence everything in their scope of vision.
- You should try to know the market power of your product and take full advantage of what it entails for you.
- Market power refers to a company's relative ability to manipulate the price of an item in the marketplace by manipulating the level of supply, demand or both.
- In monopolistic or oligopolistic markets, producers have far more market power.
- In markets with perfect or near-perfect competition, producers have little pricing power and so must be price-takers.
Meaning of Market power & Market power Definition