Strategic market power of firms in imperfect markets
Keywords:
imperfect markets; market power; market shares; non-price strategies
Abstract
Studies dealing with the market power of a firm depend on the elasticity of demand even when market imperfection is acknowledged. This study suggests that a firm derives its market power due to its interface with consumers on the market as well as its interaction with rival firms on the market. As a result, its market share and market power over a unit of sales in the industry require attention in the context of imperfect markets. Similarly, non-price strategies of firms offer some market power that should be incorporated in the definition. Thus the modified market power indices are a significant contribution to the theoretical results.
References
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2. Fischer,T., and D. Kamerschen (2003a), Measuring Competition in the U.S. Airlines Industry using Rosse-Panzar Test and Cross-Section Regression Analysis, Journal of Applied Economics, 6, 73-93.
3. Fischer,T., and D.Kamerschen (2003b), Price Cost Margins in the U.S. Airline Industry using a Conjectural Variations Approach, Journal of Transport Economics and Policy, 37, 227-254.
4. Hall,M., and N.Tideman (1967), Measures of Concentration, Journal of the American Statistical Association, 62, 162-168.
5. Hall,R.E. (1998), The Relationship between Price and Marginal Cost in U.S. Industry, Journal of Political Economy, 96(5), 921-947.
6. Lerner, A. (1934), Concept of Monopoly and Measurement of Market Power, Review of Economic Studies, 1, 157-175.
7. Perloff,J., L.Karp, and A.Golan (2007), Estimating Market Power and Strategies (Cambridge: Cambridge University Press).
8. Rao,T.V.S.R. (2017), Objectives, Product Choice, Non-Price Instruments, and Firm Specific Dominance in Differentiated Oligopoly, International Journal of Economics and Business Research, 14 (1), 1-11.
9. Rao,T.V.S.R. (2020), Market Dominance and Market Power (New Castle upon Tyne: Cambridge Scholars Publishing).
10. Rao,T.V.S.R., and S. Bhattacharyya (2021), Transient Market Power of Firms (New Castle upon Tyne: Cambridge Scholars Publishing).
11. Scherer,F. (1970), Industrial Market Structure and Performance (Chicago: Rand McNally).
12. Syverson,C. (2019), Macroeconomics and Market Power: Context, Implications, and Open Questions, Journal of Economic Perspectives, 33, 23-43.
13. Yannopoulous,P. (2011), Defensive and Offensive Strategies for Market Success, International Journal of Business and Social Science, 2(13), 1-12.
