Definitions Technical definition :  Monopoly power is the ability of a seller to push the market price of their product above their marginal cost (MC). (Source:  Xplaind.com ) Non-Technical Definition : The ability of a firm to influence the price at which it sells its product. Commentary Folks who haven't studied Economics (and even many who have) often stumble over the concept of monopoly power. It's easy to see why -- it sounds like a superpower that should belong exclusively to the monopolist. In fact, it's not exclusive to the monopolist and it can be very useful to learn about and study. Monopoly power is all around us, every day. I should point out here that "monopoly power" is synonymous with "market power". I also want to point out that the field of Law has it's own definition of "monopoly power" that may not correspond exactly with that of the field of Economics. Here we are only discussing the definition(s) used in the field of E

Market structure types is among the most fundamental of all concepts studied by Econ students. It is also one of the most useful for consumers to understand.  And yet, market types seems to be one of the least understood  by US consumers who have never studied Economics. For that reason, I think I may provide the greatest value by providing a cursory overview and non-technical explanation of market types. Understanding the different types of market structure can help consumers make better purchasing decisions and recognize markets and mechanisms that work against them.  The Market Structure Continuum Market structures exist on a continuum that extends from Perfect Competition to Monopoly. These types have different levels of competition and efficiency. Efficiency? There are at least 2 types of efficiency that relate to markets. I'm considering addressing these efficiencies in other blog posts. For now, let's hold efficiency as the degree to which value is maximized for the buye

Don't Say I Never Told You ... The first thing I want to tell you about Perfect Competition as a market structure is that it is virtually never seen in the real world . This is very important to understand. Unfortunately, this fact is often misused as a criticism of the field of Economics in general -- as if we're out of touch with reality or trying to mislead the public with deceptive constructs. Nothing could be further from the truth. All students of Economics are taught in their first weeks of classes that the market type we call Perfect Competition is rarely, if ever, observed in the real world. And when it is, it is often unstable and fleeting -- an idyllic occurrence that is often too-soon spoiled by anti-competitive machinations (sometimes necessary and well-intended). Why Study Something That Is So Ephemeral? Studying Perfect Competition allows us to establish attributes and conditions that make markets more competitive (and efficient). It also helps us recognize other