Consumers possess structural power in markets with numerous firms selling similar products. This power originates from the consumer's ability to easily switch to another brand, which represents their best alternative and compels firms to maintain lower, more competitive prices.

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A firm's ability to set prices in the product market is a form of bargaining power. This power is significantly enhanced when the firm faces few competitors, as this limits the alternative options available to consumers.

Firm's Bargaining Power from Lack of Competition

To cite the ebook, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/.

To cite a unit, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/ Unit [unit number] (url).

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