EFFECTS OF CONCENTRATION OF MARKET POWER
The concentration of market power is where there a fewer number of competitors in the market. It comes about as a result of complexity in the market making it harder for new investors to join into the market. It gives an advantage to the few players to command a larger market share. It is the type of freedom enjoyed by monopoly players in the market. Therefore, how would the above affect prices in the market? What are the consumer and producer benefits?
The few players in the market will always have a greater chance of altering the prices in the market themselves. Due to the limited service and product providers, the consumers may lack other alternatives and hence become the buyers of the said product or service. It may encourage the players in the market to control the prices wherever they like (Froeb, McCann, Ward, & Shor, 2015). The above comes as a result of constant demand. It is not like the competitive market where the market forces of demand that drive the process.
The effect to the consumer is that they may end up paying a premium for reduced quality services. This is because competition encourages efficiency and product quality. In the case that was filed in the U.S vs. Microsoft, the company, was enjoying a great monopoly due to the complexity of their services (Ashby, J., 2011). This made the government want to come in and intervene but since it was an independent s…
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