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Market Power

In: New Perspectives on Industrial Organization

Author

Listed:
  • Victor J. Tremblay

    (Oregon State University)

  • Carol Horton Tremblay

    (Oregon State University)

Abstract

In previous chapters, we discussed the static efficiency of markets from a theoretical perspective. We learned that a market is allocatively efficient when total (consumer plus producer) surplus is maximized and price equals marginal cost. A firm is said to have monopoly or market power when it can profitably raise price above marginal cost. Theory tells us that market power will be present in unregulated monopoly but not perfectly competitive markets. The extent of market power in oligopoly markets will depend on the specific characteristics of the market.

Suggested Citation

  • Victor J. Tremblay & Carol Horton Tremblay, 2012. "Market Power," Springer Texts in Business and Economics, in: New Perspectives on Industrial Organization, edition 127, chapter 0, pages 311-340, Springer.
    • Handle: RePEc:spr:sptchp:978-1-4614-3241-8_12
    DOI: 10.1007/978-1-4614-3241-8_12
    as

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