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Socio-political and market aspects of power and management realization

Journal: Scientific and practical journal “Economy of Industry” (Vol.6162, No. 12)

Publication Date:

Authors : ;

Page : 333-340

Keywords : power; management; socio-economic system; public welfare; human capital; powermanagement process; public goal;

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Based on the analysis carried outthe article argues that market power in its general sense involves the sellers’ or buyers’ ability to influence on the price of the goods. Market power can be characterized by two types. When the sellers set the price that is higher than marginal cost they possess monopoly power which is defined as the amount to which the price exceeds the marginal cost. When the buyers can receive the price which is lower than their marginal estimation of goods they possess monopsonic power and its size is defined as the amount to which the marginal estimation exceeds the price. The article argues that to some extent monopoly power is defined by the number of firms competing in the market. If the market has only one enterprise (pure monopoly), monopoly power fully depends on the elasticity of market demand. The less the elasticity of demand, the more monopoly power an enterprise possesses. When several enterprises operate on the market the monopoly power depends also on how the enterprises interact. The more cut-throat isthe competition, the less monopoly power each enterprise possesses. Based on the analysis the paper concludes that market power may impose costs on the society. Both the power of monopoly and the power of monopsony may be the reason why production is below competitive level and that is why consumer surplus and producer surplus may have complete net losses. The article argues that power relations are realized by means of the process of management aimed at achieving public goal which may be defined as ensuring the public welfare. This fact provides the ground for realizing power management process which ensures the reproduction of human capital at the cost of social investments.

Last modified: 2017-08-31 12:52:53