Importance Of Market Concentration

Market share and concentration Market share could be used as a basic factor to consider market power of a firm. It is calculated on the turnover or volume of sales of that firm in total of market . The higher in market share means the greater in sale this firm gains from its competitors and usually reflect a part of its power in the market.
From number of participants and their market shares, the degree of market concentration could be defined. The higher market concentration, we could think about a firm closer a monopoly .
These factors comparatively easy to obtain and compute when the relevant market was identified. With higher market share and concentration, we will need less evidence for a further assessment on market power of a firm. A

Barriers to entry Assessment of market entry could also reveal a market dominance. The main of barriers to entry to be considered are:
- Structural barriers refer to basic industry conditions such as legal requirements, costs, technology, and demand .
- Strategic behaviour is any actions of a firm to maintain and enhance its position in the market to have competitive advantages and increase of long-run profits. This may prevent new entrants from constraining to other incumbents .
Moreover, when assessing barriers of market, it is also important to consider expansion and exit barriers, such as: non-transferable fixed assets, etc. Most of barriers are really challenges to be measureable, because operation of a market is very complicated, we often find difficult to point out which of the conditions of entry and expansion create barriers as well as aggregate these into barriers of a market.
Moreover, entry barriers of each firm might be difference. For example, the new entrant with more advantages of technology usually has lower barriers than other

Thus, countervailing power may prevent a firm having SMP. For example, market power of manufacturers may be restricted by the market power of retailers, and vice versa.
The buyer power might be enhanced by the information about alternative sources, a new entrants to supplying market, etc. In assessing impact of countervailing power on market power, it necessary to consider range of consumer and power customer could effect to other consumer or only themselves.
For example, a power customer could balance the prices increase of the provider, if the prices are offered individually, other smaller buyer may not be benefit. But if all customers are offered the same prices for a product, these power customers could have a constraining effect more broadly and other consumer also benefit from this. Comment: Even companies with a large market position may still lack market power, it is necessary to have more consideration and assess the balance power of that firm - countervailing power (as in the Commission Decision on case Enso/Stora in