Markkinavoiman

Markkinavoiman, which translates to "market power" in English, refers to the ability of a market participant to influence prices, profit margins, or other market conditions that affect their own or their competitors' well-being.

Market power can be exercised through various means, such as cartelization, predatory pricing, price-fixing, or other forms of anti-competitive behavior. Companies with significant market share or control over essential inputs may use their power to limit competition, raise prices, or monopolize the market.

In economic theory, market power is often associated with monopoly or oligopoly market structures, where a small number of firms dominate the market. In such scenarios, companies may be able to set prices above the competitive level, leading to welfare losses for consumers and potentially harming competition.

Regulatory agencies, such as antitrust authorities, focus on identifying and mitigating market power through various measures, including merger review, licensing requirements, and enforcement against anti-competitive practices. Governments and policy-makers may also implement policies aimed at promoting competition, such as promoting market entry, breaking up monopolies, or regulating industry-wide standards.

Market power can be beneficial in certain contexts, such as in situations where a dominant company invests in research and development, which can lead to innovation and better products for consumers. However, excessive market power can lead to negative outcomes, such as higher prices, reduced quality, and decreased innovation. A balance between promoting competition and allowing dominant companies to exercise their market power is essential for maintaining a healthy and competitive market.