Market Dominance and Market Power

Consider a market where firms sell differentiated but substitutable products. Each firm has some uniqueness for its products but also has non-cooperative rivals. The market power of a firm is determined by the inelasticity of demand for its products as well as it market share. First, an index incorporating both these effects has been proposed. Second, non-price choices of firms help consumers discover the value of different products. A concept has been developed to discover this. A market power index at the firm level has been proposed taking this into account. Third, it was recognized that firms use strategies in excess of this. A measure of this has been proposed. Fourth, aspects of regulation based on the positive market power of firms have been conceptualized. The implementation of these concepts has been illustrated through an example