2min chapter

Think Like An Economist cover image

S E21: Market Power - Why businesses charge more

Think Like An Economist

CHAPTER

Market Power Isn't Great for You, Justin

A business's market power determines how much it'll be able to charge a mark up above its marginal costs. Market power is so key that business schools are full of classes o marketing and strategy. People get frustrated because market power means sellers get rich and buyers lose out. But economists focus on the fact that higher prices mean fewer sales, and therefore fewer people can benefit from buying and using the product.

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