Explain the relationship between market structure, market power and the firm's ability to capture the value that it creates through its products

The market power refers to the ability of a firm to profitably raise the market price of a good and service over marginal cost. The firm with market power can individually affect either the total quantity or prevailed price in the market. The company has the market power by controlling a large portion of the market. The source of the market power is imperfect market structure according to the ability of a firm to influence the price.

The market structure establishes the complete environment within each firm operates. It affects the market power.

In the case of perfect competition, a firm cannot influence the price on the market as they are a price taker. The entry to the market is easy for the firm. The firm has an equal capability to capture the value.

In the case of the monopoly market, the producer is a price maker of the product as well as the single seller. They sell a unique product, thus have high ability to capture the market value.

In the case of oligopoly, few firms are dominating the market all they enjoy shared market power. Thus cannot capture the larger share in comparison to each other.

In the case of the monopolistic market, the seller produces a slightly differentiated product, and therefore, they charge a higher price according to the difference. They are low to the barrier to entry and exit, thus capturing a smaller market value.