In the United States (U.S.), Antitrust Law(Links to an external site.) addresses economic harm resulting from market power. Market power exists in any market that is not perfectly competitive. Antitrust Law discourages collusion, protects consumers, and ensures competition. Competition offers sufficient policing of firm behavior. Many sellers offering identical products limits the ability of firms to price above marginal costs or to control or restrict output levels. It also forces firms to innovate and behave efficiently. In the long run, new firms are free to enter the market to contest excess profits.

Oligopoly involves only a few sellers of a standardized or differentiated product so that each firm is affected by rivals' decisions. It behaves strategically to maximize total revenue in the interests of owners or shareholders. Efforts to safeguard public interests increase costs and reduce competitiveness. Regulation nevertheless serves certain social purposes. 2014 Nobel Prize winner, John Tirole, argues that society can benefit from regulation in the digital economyfor instance, to improve competition, laborers' treatment, privacy, and taxation (Tirole, 2014).

Initial Post

In your initial post:

• Describe an example of a firm or type of firm you believe does not exist in a perfectly competitive market.
• Identify one of the four basic market structures considered by economists that you believe characterizes the industry the firm functions in.
• Explain whether this firm abuses its power and describe the impact on consumers if you believe you identify abuse.
• Describe how increased competition would affecting firms described by your peer would affect ability abuse market power.