Issues in Business Management and Economics
Vol.4 (4), pp. 41-46, June 2016
Available online at https://www.journalissues.org/IBME/
Article ID /BM/16/031/06 pages
Author(s) retain the copyright of this article. Author(s) agree that this article remain permanently open access under the terms of the Creative Commons Attribution License 4.0 International License.
Market power and competition: Some implications for Nigeria’s economy
C. Chris Ofonyelu
Department of Economics, Adekunle Ajasin University, Akungba Akoko, Ondo State, Nigeria.
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The usage of market power by strong firms to compete against the weaker ones, sustain higher profits and deter entrants has become a common practice in many markets. This suggests that there is a link between market power possessions, firm concentration and competition. By examining the operations of the flour, sugar and palm olein vegetable oil companies in Nigeria, this study observed a positive relationship between market power possession and competition. Firms with market power stands at advantage during competition. The possession of market power aids attainment of higher profits, investment in capacity utilization and economic growth. Increase in competition was a major factor responsible for the growing firm concentration in Nigeria. The study suggests increased firm concentration and acquisition of idle capacities as part of the future implications for the economy.
JEL Classifications: D22, L16, M13
Key words: Industrial concentration, market power, competition, efficiency