Market Power and Pricing

Market power refers to the ability of a company or seller to influence the price of a product or service in the marketplace. When a business has significant market power, it can set higher prices than competitors without losing customers. This typically occurs in markets with few sellers or unique products. Pricing, in this context, reflects both supply and demand dynamics as well as the seller's market power. Companies with more market power can maintain higher profit margins, potentially affecting consumers' choices and overall market competition. Thus, market power impacts both pricing strategies and consumer access to goods and services.