The degree of monopoly (or market) power enjoyed by a firm depends on the elasticity of the demand curve that it faces. As the elasticity of demand increases, i.e. , as the demand curve becomes flatter, the inverse of the elasticity approaches zero and the monopoly power of the firm decreases. Thus, if the firm’s demand curve has any elasticity less than infinity, the firm has some monopoly power. It is only the competitive firm that faces a horizontal demand curve who has no market power.
The degree of monopoly (or market) power enjoyed by a firm depends on the elasticity of the demand curve that it faces. As the elasticity of demand increases, i.e. , as the demand curve becomes flatter, the inverse of the elasticity approaches zero and the monopoly power of the firm decreases. Thus, if the firm’s demand curve has any elasticity less than infinity, the firm has some monopoly power. It is only the competitive firm that faces a horizontal demand curve who has no market power.
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