Market power is the ability for a firm to raise the market price for something. Market power extends from a competitive advantage or dominant market position. It is generally used in the context of keeping the price level a bit high than usual. Market Power Definition. Market power is defined as the ability of an organization to manipulate the price of a product or service in the market by influencing the demand and supply levels directly or indirectly. Antitrust legislation limits a company's ability to wield significant market power and levies substantial penalties on those in violation. Market power enables a firm to control the prices or the amount of goods and services that it provides to the market that it is involved in. Market power refers to the firm's capability to influence or control its cost by controlling supply and demand. Although a precise economic definition of market power can be put forward, the actual measurement of market power is not straightforward. In a highly competitive market, individual participants have little or no control over price. Market power enables firms to charge a higher price than the equilibrium price in a competitive market. The firm is also able to increase the prices of goods and services without the fear of loosing its customers. It is also considered as a measure of the degree of control an organisation has over the price and output of a product in the market. Market power definition based on common meanings and most popular ways to define words related to market power. market power meaning: the ability of a company to control prices in a particular industry: . Market power often results in the loss of economic welfare and minimized output. For example, a farmer producing a commodity crop can't affect the price much. Market Power Definition Market power is an economic term that refers to the ability of a company to successfully raise the prices of goods or services in the general market. Market power can be defined as an organisationâs ability to increase the market price of a good or service over marginal cost to achieve profits. Defining âMarket Powerâ â¢ âMarket power is the ability to raise prices above those that would be charged in a competitive market.â â Supreme Court in NCAA n.38 (1984) â¢ âA merger enhances market power if it is likely to encourage one or more firms to raise price, reduce output, diminish innovation, or â¦ Activities of the market power result in to decrease in output. Learn more. / Market Power: Definition, Determinants, Effects, Measure Whatâs it: Market power is the firmâs ability to influence its productsâ prices in the market. Personalized Financial Plans for an Uncertain Market. The exercise of market power leads to reduced output and loss of economic welfare. market power or monopoly power the ability of a firm (or group of firms) to dictate market prices and other terms and conditions of supply. Market power lends itself to possible abuse and consumer exploitation (price gouging). Board of Regents, the Court defined 'market power' as 'the ability to raise prices above those that would be charged in a competitive market.' Market power derives essentially from the possession of a dominant market share (see MONOPOLY) or from COLLUSION between the leading suppliers.