Definition
- Market power
- Market power is a firm's ability to set its own price rather than take the market price as given, as a price taker must.
Example
Can you think of an example of market power?
A wheat farmer among thousands cannot charge any buyer more than the market price, because the buyer would go to another farmer. A train company running the only service on a route can.
Test yourself
Can you name the three conditions for price discrimination?