Firms have market power in: a

Marketing Jan 15, 2021

Firms have market power in:

a. perfectly competitive markets.

b. monopolistically competitive markets.

c. monopolistic markets.

d. monopolistically competitive markets and monopolistic markets.

Expert Solution

Firms have market power in d. monopolistically competitive markets and monopolistic markets.

Monopolistic firms have much more market power than monopolistically competitive markets since there is a single seller in the monopolistic market. Normally, monopolistically competitive markets have many sellers. A monopoly firm has market power since it is the only producer in the market while monopolistically competitive firms get market power from product differentiation. Perfectly competitive firms do not have any market power since there are a large number of firms offer the same kind of products in the market.

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