discuss the market power theory and explain how a company can achieve market power.

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The Market Power Theory

Markets can be dominated by either the customers or the companies Companies which have market power have the ability to change the prices of the goods or services that they are providing . These kinds of situations are found in imperfect markets . Imperfect markets are markets that allow the participants to have market power . Perfect markets on the other hand are controlled by the forces of demand and supply . The participants in the perfect markets do not have any control

over the prices they can charge for the goods or services and are therefore price takers . In imperfect markets the participants who have power to control prices are referred to as the price makers . The companies that have the ability to control the prices are also able to control the supply of the goods and the services that they provide . This eventually leads them to control the demand of the goods and services . The companies have a large share of the market for the goods and services they provide hence they are therefore able to control the entire market . In some extreme cases the companies are able to control the entire market . This discusses the market power theory and explains how a company can achieve market power

Market power enables a firm to control the prices or the amount of goods and services that it provides to the market that it is involved in . The firm is also able to increase...