Market power
Definition. Market power is the ability of a firm to influence the price of its product, rather than having to accept the price set by the market. A firm with market power faces a downward sloping demand curve and can raise price above marginal cost.
Market power underpins price discrimination, where a firm charges different prices to different consumers for the same good. Greater market power generally results from barriers to entry and a lack of close substitutes.
This term belongs to Price Discrimination in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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