Encyclopedia of Law and Economics

2019 Edition
| Editors: Alain Marciano, Giovanni Battista Ramello

Static Market Power

  • Rafael Emmanuel MacatangayEmail author
Reference work entry
DOI: https://doi.org/10.1007/978-1-4614-7753-2_458


Static market power refers to the ability of economic agents profitably to move prices away from competitive levels during one time period. Market power, a form of market failure, prevents the achievement of an efficient allocation of resources. The simplest example of market power is monopoly, a market in which there is only one firm. Another example of market power is oligopoly, a market in which there is a small number of firms. The determination of whether or not prices profitably deviate from competitive levels is at the heart of antitrust law and economics. Methods for analysing the unilateral change in incentives arising from merging two firms have become influential as a screening device for identifying potentially anti-competitive mergers in the EU, US, and UK.

This is a preview of subscription content, log in to check access.


  1. Bork RH, Sidak JG (2013) The misuse of profit margins to infer market power. J Comp Law Econ 9(3):511–530Google Scholar
  2. Carvajal A, Deb R, Fenske J, Quah JK-H (2013) Revealed preference tests of the Cournot model. Econometrica 81(6):2351–2379CrossRefGoogle Scholar
  3. Church J, Ware R (2000) Industrial organization: a strategic approach. Irwin McGraw-Hill, BostonGoogle Scholar
  4. Competition and Markets Authority (2014) Mergers: guidance on the CMA’s jurisdiction and procedure. Competition and Markets Authority, LondonGoogle Scholar
  5. Competition Commission (2008) Merger remedies: Competition Commission guidelines. Competition Commission (now the Competition and Markets Authority), LondonGoogle Scholar
  6. Davis P, Fletcher A (2013) Contributions to competition economics. Econ J 123(572):F493–F504CrossRefGoogle Scholar
  7. European Commission (2014) Commission staff working document accompanying the document “Towards more effective EU merger control.” European Commission, BrusselsGoogle Scholar
  8. Mas-Colell A, Whinston MD, Green JR (1995) Microeconomic theory. Oxford University Press, New York/OxfordGoogle Scholar
  9. Shapiro C (2010) The 2010 horizontal merger guidelines: from hedgehog to fox in forty years. Antitrust Law J 77:701–759Google Scholar
  10. Stoft S (2002) Power system economics: designing markets for electricity. Wiley-IEEE Press, New YorkCrossRefGoogle Scholar
  11. Varian H (2010) Intermediate microeconomics a modern approach. W. W. Norton, New York/LondonGoogle Scholar
  12. Vives X (1999) Oligopoly pricing old ideas and new tools. MIT Press, Cambridge/Massachusetts/LondonGoogle Scholar
  13. Vives X (2011) Strategic supply function competition with private information. Econometrica 79(6):1919–1966CrossRefGoogle Scholar
  14. Willems B, Rumiantsevac I, Weigt H (2009) Cournot versus supply functions: what does the data tell us? Energy Econ 31(1):38–47CrossRefGoogle Scholar
  15. Wolak FA (2014) Regulating competition in wholesale electricity supply. Chapter 4. In: Rose NL (ed) Economic regulation and its reform: what have we learned? University of Chicago Press, ChicagoGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Centre for Energy, Petroleum and Mineral Law and Policy School of Social SciencesUniversity of DundeeDundeeUK