Describe in your own words the concept of market power.
Write a one to two page paper, addressing the following:
a. Describe in your own words the concept of market power.
b. What are the three reasons that a market might have a Monopoly?
c. Give an examples of two monopoly Firm exercising its market power.
Respond to the postings of two of your classmates.
Student 1
A- Market power refers to a company\’s relative ability to change or manipulate the price of a product in the market by changing
the level of the supply or demand of both.
Or in another words we can say that the market power is the ability of a firm or firms to raise and maintain price above the level
that would prevail under competition referred to also as monopoly power. The practice of market power leads to reduce output
and loss of economic welfare.
B- 1- High start-up cost
2- The government grants one company the exclusive right to produce a specific product.
3-When there is a large barriers from economic of scale or government policies.
4-When just one company owns the main resource
C-Examples:
Microsoft : Dominates the software market.
Google : Has 90% of the advertising market in the UK which worth 70 billion pound per year.
Student 2
Describe in your own words the concept of market power?
The market power, is the ability of some firms or business to listed or to set the price that higher than a level of prices in the market. This means, in particular, they can raise their prices without losing any customers to competitive.
What are the three reasons that a market might have a Monopoly?
The goods, products or service are owned and provided by only ONE firm or company.
The government allowed one company to produce specific kind of products, or give them the exclusive right to produce it.
The costs of production make a one company producer more efficient than a large number of many companies.
Give an example of two monopoly Firm exercising its market power.
Amazon gives its own products and first-party products an advantage over competitors in a number of ways, from algorithmic ranking, to the buy box, to premium advertising, to direct to consumer marketing, to exclusive customer reviews. All of these thumbs on the scale in favour of Amazon’s own products distort competition.
Facebook could be considered a monopoly that has too much power for three simple reasons: its dominant user base, its pricing power, and its lack of direct competition.
Answer preview to describe in your own words the concept of market power.
APA
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