Market Power

Victor J. Tremblay and Carol Horton Tremblay
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Victor J. Tremblay: Oregon State University
Carol Horton Tremblay: Oregon State University

Chapter Chapter 12 in New Perspectives on Industrial Organization, 2012, pp 311-340 from Springer

Abstract: 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.

Keywords: Marginal Cost; Market Power; Price Competition; Economic Profit; Lerner Index (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/978-1-4614-3241-8_12

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