Firms in monopolistic competition or imperfectly competitive markets are more likely to have limited market power because there are many firms with differentiated products (there are substitutes) and there is relative ease of entry and exit into the market Market power is the ability of an agent to influence the price of a good they sell or buy and to alter the allocation of resources. Sources of market power: - monopoly, oligopoly, monopolistic competition - monopsony, oligopsony - Institutional structure (laws, regulations customs) Market Power among Sellers · Monopoly - a single seller of a good with no close substitutes and barriers of entry. · Oligopoly - a market characterized by significant barriers to entry and "a few "sellers who recognize their interdependence in the market; products may be homogeneous or differentiated.
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