Understanding Market Power And Dominance In The Tech Sector
- IJLLR Journal
- 54 minutes ago
- 1 min read
Srishti Sharma, Amity University Noida
Shailja Khosla, Amity University Noida
1. Defining Market Power and Dominance
Definition of market power and dominance is critical in understanding the anti-competitive conduct of the tech giants in the current digital economy. The two terms, although related, differ in competition law. Theoretical, legal, and economic underpinnings of the two terms are addressed herein, alongside their changing meaning in the platform economy controlled by the big technology companies.
1.1 Market Power: The Economic Core
Market power is the capacity of a company to increase prices above the competitive price without experiencing perceptible loss in sales. It is the capacity to behave independently of market forces, i.e., consumer desires or activities of competing companies. According to traditional economics, market power can be quantified in terms of the price elasticity of demand: a company with humongous market power possesses inelastic demand, and hence it can impose higher prices without reducing significantly demand for its products or services. The United States Supreme Court, in United States v. E.I. du Pont de Nemours & Co., has explained market power as "the power to control prices or exclude competition." The European Commission also defines market power as a state of economic power which an undertaking possesses to the extent that it can exclude effective competition and to act to some extent independently of its competitors, customers, and finally consumers.
