Market Power and Technology

Market Power and Technology It is well known that market power depends on the price elasticity of demand and the intensity of competition. It is also well known that technology can influence market power through its effect on market structure. However, there is limited research on the direct link between market power and technology. In this paper, we investigate this relationship. We find that the monopoly price can be constrained to be identical to marginal cost under certain technological conditions. We also show how market power depends directly upon technology, holding constant demand conditions, market structure, and the degree of competition. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals
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Publisher
Springer US
Copyright
Copyright © 2012 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-012-9334-z
Publisher site
See Article on Publisher Site

Abstract

It is well known that market power depends on the price elasticity of demand and the intensity of competition. It is also well known that technology can influence market power through its effect on market structure. However, there is limited research on the direct link between market power and technology. In this paper, we investigate this relationship. We find that the monopoly price can be constrained to be identical to marginal cost under certain technological conditions. We also show how market power depends directly upon technology, holding constant demand conditions, market structure, and the degree of competition.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Jan 25, 2012

References

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