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Simple English definitions for legal terms
market power
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A quick definition of market power:
Market power is the ability of a company to raise prices and reduce the amount of goods or services they produce without losing too many customers. This means that they can charge more than what it costs them to make the product and still make a profit. When a company has a lot of market power, they may be able to control the market and prevent other companies from competing with them. This can be bad for consumers because they may have to pay more for products or services than they would if there were more competition.
A more thorough explanation:
Definition: Market power refers to the ability of a company or a group of companies to control the market by reducing output and raising prices above the competitive level for a sustained period. This allows them to make a profit by doing so. In antitrust law, having a large amount of market power may constitute monopoly power.
For example, if a company has a monopoly on a certain product, they have complete market power and can charge whatever price they want without fear of losing customers to competitors. Another example is when a group of companies collude to fix prices, which gives them market power over the industry.
Market power is harmful to consumers because it limits their choices and forces them to pay higher prices. It also stifles competition and innovation in the market.