ECON 305 Lecture Notes - Lecture 17: Market Power
21 Jun 2015
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Another approach to deterrence is when an incumbent firm is able to raise its rival"s costs (rrc), thereby influencing the market environment in which it competes. A firm with market power may be able to exclude or limit rivals by actions that raise their costs. The term exclusionary market power is the ability to raise or maintain prices above costs by conduct that: If the government gives permits to existing firms, a new firm that has to enter the market needs to buy it, then that raises costs for the entrant. Exclusive supply agreements e. g i sign a big contract with only if you agree not to supply to any of my competitors. E. g coal mining was a big thing, workers worked under extremely hard conditions, during wwii the miners want on strike. The leader"s idea was that it was a dirty hard bitter job and wanted to get higher wages and better working conditions for everyone.
