Concept

Dominance (economics)

Market dominance is the control of a economic market by a firm. A dominant firm possesses the power to affect competition and influence market price. A firms' dominance is a measure of the power of a brand, product, service, or firm, relative to competitive offerings, whereby a dominant firm can behave independent of their competitors or consumers, and without concern for resource allocation. Dominant positioning is both a legal concept and an economic concept and the distinction between the two is important when determining whether a firm's market position is dominant. Abuse of market dominance is an anti-competitive practice, however dominance itself is legal. Firms can achieve dominance in their industry through multiple means, such as; First-mover advantage, Innovation, Brand equity, and Economies of scale. Many dominant firms are the first "important" competitor in their industry. These firms can achieve short- or long-term advantages over their competitors when they are the first offering in a new industry. First-movers can set a benchmark for competitors and consumers regarding expectations of product and service offering, technology, convenience, quality, or price. These firms are representative of their industry and their brand can become synonymous with the product category itself, such as the company Band-Aid. First-mover advantage is a limited source of market dominance if a firm becomes complacent or fails to keep up innovation by competitors. It is recognised that firms who place greater importance on product innovation often have an advantage over firms who do not. The significant links to Game theory have are apparent, and in conjunction with empirical evidence, research has attempted to explain whether more dominant firms or less dominant firms innovate more. Referring to the value that branding adds over a generic equivalent, Brand Equity can contribute to gains in market dominance for firms who choose to capitalise on its worth, whether through charging a price premium or other business strategy.

About this result
This page is automatically generated and may contain information that is not correct, complete, up-to-date, or relevant to your search query. The same applies to every other page on this website. Please make sure to verify the information with EPFL's official sources.
Related courses (1)
MGT-200: Economic thinking
This course introduces frameworks, concepts and tools to understand the economic dimensions of the world we live in. The course includes applications to real-world situations and events. Assessment is
Related lectures (6)
Competition Law: Fundamentals and Enforcement
Explores the fundamentals of competition law, including agreements, abuse of dominance, mergers, and compliance plans.
Bidding Strategies in Power Systems
Explores strategic bidding, market power, and Game Theory in power systems, emphasizing optimal bidding strategies and market imperfections.
Show more
Related publications (32)

Energy Management of Price-Maker Community Energy Storage by Stochastic Dynamic Programming

Tianshu Yang, Xue Zhang

In this paper, we propose an analytical stochastic dynamic programming (SDP) algorithm to address the optimal management problem of price-maker community energy storage. As a price-maker, energy storage smooths price differences, thus decreasing energy arb ...
China Electric Power Research Inst2024

Equilibria in Network Constrained Energy Markets

Leonardo Massai

We study an energy market composed of producers who compete to supply energy to different markets and want to maximize their profits. The energy market is modeled by a graph representing a constrained power network where nodes represent the markets and lin ...
Elsevier2023

Essays on the Economics of Innovation: Incentives, Diffusion, and Disparity

Ling Zhou

As an important policy instrument for guiding innovation, the patent system involves a long-standing tension between creating economic rewards for the original innovators and stifling subsequent R&D activities. The availability of new data allows us to pr ...
EPFL2021
Show more
Related concepts (2)
Market power
In economics, market power refers to the ability of a firm to influence the price at which it sells a product or service by manipulating either the supply or demand of the product or service to increase economic profit. To make it simple, companies with strong market power can decide whether higher the price above competition levels or lower their quality produced but no need to worry about losing any customers, the strong market power for a company prevents they are involving competition.
Competition law
Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust law (or just antitrust), anti-monopoly law, and trade practices law; the act of pushing for antitrust measures or attacking monopolistic companies (known as trusts) is commonly known as trust busting. The history of competition law reaches back to the Roman Empire.

Graph Chatbot

Chat with Graph Search

Ask any question about EPFL courses, lectures, exercises, research, news, etc. or try the example questions below.

DISCLAIMER: The Graph Chatbot is not programmed to provide explicit or categorical answers to your questions. Rather, it transforms your questions into API requests that are distributed across the various IT services officially administered by EPFL. Its purpose is solely to collect and recommend relevant references to content that you can explore to help you answer your questions.