Market power

Definition

A firm or organization is said to have market power over a certain commodity if it has significant ability to influence the market price of the commodity. The extent of market power is defined by the ability to influence the price. The strongest form of market power is monopoly power, where a firm, being the only producer of a commodity (and protected by some barrier to entry) can indulge in monopoly pricing -- it can choose both the price and quantity it produces so as to maximize profits.