Market Power

Extent to which a firm can influence the price of an item by exercising control over its demand, supply, or both. Under the economic concept of perfect competition, all firms in a market are assumed to have zero market power. Thus, each firm has to accept the current market price without being able to exercise any control over it. In reality, however, in every market some firms do have varying levels of market power; firms with highly differentiated products having almost monopoly power.