Market power

Plant requirements Labor Transp ortation Raw materials Markets Power... 

Entities involved in long-term contracts with electric utihties, such as fuel supphers and NUGs selling power to utihties, also have concerns that some utihties or industrial customers will not be able to honor their contracts under the new, more competitive system. Einahy, some utihties are concerned that they wih not be adequately reimbursed for opening up their transmission systems to competitors. The potential competitors in turn are concerned that utihties whl not provide unbiased access to their transmission systems if the utihties themselves are also in business of marketing power. There has also been some debate regarding which transmission facihties are eligible for open access. This is because some facihties are considered local distribution systems by utihties, which feel they should not be opened to competitors. 

Suddenly there was a significant change in the import/export dynamics of the world. From 1970 to 1973 the United States increased its proportion of imported oil from 10 percent to 23 percent of domestic demand, a substantial 2 mbd increase in imports. At the same time, Saudi Arabia increased its exports by 120 percent, or about 4 mbd, to become the world s most important oil exporter. This change in the balance of exports on the international market gave Saudi Arabia and the rest of the Organization of Petroleum Exporting Countries (OPEC) tremendous market power. It was only a matter of time before they would use it. 

The 1973 Yom Kippur war caused Arab oil producers to boycott oil exports to the United States and some allies. While the boycott may look like the culprit in the 1973 oil price shock, the cuts in exports actually did not last long, with the oil price increases continuing long after the Arab/Israeli war was over. The real reason why oil prices surged up and stayed there was because world oil demand was high, while Saudi Arabia and OPEC kept supplies low. OPEC used its market power to curtail its own oil exports in... 

The clever combination of chemistry and microsphere technology enables advertisers to take advantage of the incredible marketing power of scent. These innovations have also modernized paper-based recordkeeping and business transactions. 

Even in an ideal situation in which the doctor is a perfect agent for the patient, the need to regulate prices in the pharmaceutical market may arise from insufficient or very weak competition owing to the temporary market power of the manufacturers, the oligopolistic nature of many therapeutic submarkets, low elasticity of demand and imperfect prescriber information.1... 

Economic theory on price regulation in public services with market power considers two alternatives (RORR) and price-cap regulation (PCR). The following two sections of this chapter deal with the advantages and disadvantages of these two forms of regulation as applied to the pharmaceutical sector.14... 

In short, the imperfections of the pharmaceutical market cause (a) less price sensitivity on the demand side, (b) a certain amount of market power on the supply side, and (c) demand curves that do not reflect the true social benefit. Demand for pharmaceuticals is greater and less price-elastic than it should be. The reason for this is that consumers have little price sensitivity, especially under insurance coverage. 

Some firms are able to achieve more power in the market by acquiring competitors. However, they may experience higher costs than expected if they are unable to integrate the two companies successfully. Additionally, firms that acquire others to achieve market power often place too much emphasis on gaining efficiencies and lose, or are unable to develop, the capabilities required to be innovative (Hitt, Hoskisson, Johnson, Moesel, 1996). When this occurs, entrepreneurial and more nimble competitors may introduce new products to the marketplace that eventually erode the focal firm s market share and market power. 

For every product traded in the market, there are many buyers and many sellers, none of whom possesses monopolistic market power (such as those conveyed by patent laws). 

A more in-depth discussion of reference pricing lies beyond the compass of this essay (in this regard, see Kanavos and Reinhardt 2003). Suffice it to say, it is a powerful method of introducing market power on the demand side of prescription drugs covered by health insurance, and one likely to be embraced, sooner or later, by private health insurers, as they seek to cope with the ever-rising cost of health care. 

If the market power inherent in the decisions of patients is to be more effectively harnessed in the control of health care costs, then it becomes essential that patients, as well as their physicians, are better informed than they now are about the relative costs and benefits of rival products with the same therapeutic target, in short, on their relative cost effectiveness. The development of such an information base will be another major challenge of health policy makers in the coming decades. 

Mandates have several justifications. Absent mandates, health plans may have an insufficient incentive to cover vaccines. Such coverage may not be demanded because individuals do not take account of the health and financial externalities in their purchase decisions (Summers 1989). Also, people may underestimate the probability of contracting various diseases (Jensen and Morrisey 1999). Vaccines are more likely to interfere with the spread of the disease than are drug treatments. As the probability of contracting a disease falls, fewer persons maybe expected to demand to be vaccinated for the disease. Also, market power of sellers of vaccines may be lower than for drug treatments. With drugs, persons who may benefit from the treatment are identifiable to sellers, thus allowing firms to extract consumer surplus... 

Fundamentally, patents involve a trade-off between rewarding innovation and market power. Patent protection balances limit monopoly power (a static inefficiency) against the incentive to create and share new research (a dynamic efficiency). This balance also reflects the inherent tension between two public policy objectives safe, affordable access to a variety of cutting-edge drugs and continued pharmaceutical innovation through investment in R D. While the existing patent system provides for limited monopoly power to reward innovation, it concurrently restricts access to medicines. 

Recent publications [11] remark if the industry and PV market analysts were to consider security as an independent market segment it would focus attention on developing PV security applications and products, and on marketing. Power grids, pipeline systems and civilian telecommunications systems can be disrupted—sometimes extensively and for a considerable... 

By the end of the year 2005, the German electricity prices further increased. We did not analyse the reasons for this development. The price increase could be attributed to one of the following three factors (i) scarcity of generation capacity, (ii) higher gas prices than in previous winters, thus higher prices when gas is at the margin, and (iii) the exercise of market power. 

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