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Are you using “market power” differently than the common definition in economics? It normally refers to any firm which has the ability to set prices above margi
by tshaddox 4y ago
Are you using “market power” differently than the common definition in economics? It normally refers to any firm which has the ability to set prices above marginal cost without losing revenue, i.e. any firm in a market that lacks perfect competition, i.e. every firm that actually exists.
- Nomentatus 4y agoSame definition (except I don't think you want marginal cost there, because fixed costs - not just the increase in fixed costs - as well as opportunity costs - should be included), but of course market power can be used to restrain trade, take over adjacent markets, etc; as well as just soak the consumer in the short run. All these are abuses and illegal - still the litmus test of being able to charge extra is a good one.