The continuum of market power of sellers is increasing from left to right:

Perfect Competition ----Monopolistic Competition ----Oligolpoly----Monopoly

Market Power exists when the competition is lessened. In Perfect Competition, there are many sellers in the market, and they are making a product that is relatively identical. It is easy for buyers to choose a different seller so the seller has no market power. An example of a firm in Perfect Competition is a wheat farmer.

In Monopolistic Competition there are still many competitors, but there is product differentiation between sellers. The buyer has less choice than in perfect competition so that gives the sellers more market power than sellers in Perfect Competition. An example of a firm in Monopolist Competition is a beauty salon.

In an oligopoly market there are few sellers in the market. Since there is a reduced choice for the buyers, the sellers have more market power. The competition between the sellers for market share serves as a check on price setting. The firm in Oligopoly has more market power than in Monopolistic Competition. But they are not able to price anywhere they wish, because they risk losing market share. An example of a firm in ab Oligopoly market is an auto manufacturer.

The monopoly market is served by only one firm and since there is no competition. The buyer has no choice but to accept the price of the monopolist. The monopolist will set the price where their profit is maximized. This is the situation where market power is maximized. An example of a monopoly firm is a pharmaceutical firm with a patent on an important prescription drug.

A price ceiling example is rent control. In some cities where rent control has been implemented the results are not usually favorable. Rent control puts a price ceiling on rent which is the maximum a landlord can charge. A problem can occur when the price ceiling is a rent that is below what the apartment market usually sets. A landlord is losing rent receipts at the market rent minus the rent ceiling. This leads to a loss of supply of apartments for rent. Landlords will not build new units if they cannot get the market rate for rent.

A price floor example is the minimum wage. There is a market for labor that establishes a wage rate that exists at the equilibrium point of supply and demand. If government creates a minimum wage it is a price floor. If the minimum wage is above the market wage, it will likely lead to unemployment all else being equal. There will be an increase in workers willing to work because of the higher wage, but employers will be looking for ways to use less labor to keep the prices of their products in line with what buyers are willing to pay.