Dominant Position of a Company - 978 Words

According to the European competition case law, a dominant position is defined as â€Å"the power of a firm to behave to an appreciable extent independently of its competitors, customers and consumers†. It is obvious that a firm or several firms which hold a dominant position can determine price, the amount of production, supply and this is because these firms can act independently of their competitors and customers. As a result, dominant position can lead to the market power and in this situation a firm or several firms have an ability to individually make a big influence on the price and total quantity produced which could result to the market failure. But does this definition make an economic sense and how it should be interpreted in†¦show more content†¦Moreover, in order to determine the definition of dominant position in monopoly, at first we need to understand the basic aspects of it. Monopoly is a situation when a certain agent is the only one who supplies a p articular good, of course, it is obvious that this market has a lack of economic competition. In monopoly a company has a much bigger profit than it could expect in competitive market, because that only firm regulates all the prices and services for that certain good. As a result, it can raise the price and maximize its profit without worrying of losing its customers. So, the dominant position in monopoly is a market with a single agent which has a power to operate independently and has an ability to make a big influence on the prices and production. Finally, to do the same in oligopoly we also need to understand the basic aspects of it. Oligopoly is the market share of several firms which together make a big influence to the price or other outcomes of a certain market, however the difference between monopoly and oligopoly is that in oligopoly firms do not operate independently, because then they could lose some of their customers to their competitors. That is why several dominant firms always try to cooperate together and sometimes they even make some secret agreements in order to maximize their profits. So, the dominant position in oligopoly is the market share of several dominant firms who have an ability to make bigShow MoreRelatedCompetition Law, the Dominant Position Essay1273 Words   |  6 Pages102 TFEI which deals with situation of abuse of a dominant position in European Union competition law. 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