Question

There has been some empirical research that argues market power of firms has increased over the...

There has been some empirical research that argues market power of firms has increased over the last decade. If that is true give an example and solution

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Answer #1

Increase in market power means that some firms have a centralization of market power ie increase of monopoly so that they control the price in the market and charge a high price and dislike the welfare. At the same time, they keep the output low and keep the prices as high as possible so that more and more profits can be made, which is developing a new kind of economic colonism.

For example : apple Inc. In the smartphone market.apple is now a monopoly in this market of smart phone of higher price .

We have to increase competition in this sector by increase entry of other player to develop quality smartphone at low cost. For this a common rule and regulations must be set up at global level regarding to increase competition and set up suitable Price. Market reform for this sector is necessary to stop monopoly pricing.

Price caping is also a solution by regulations authority.

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