Innovation and market power: a study of interrelation on the telecommunication service market

Mechanisms of inter-connection of product innovations and market power are analyzed based on the model of the circular city by S. Salop. It was found that the choice of the point of introduction of innovative products in the commodity space by innovator- firm is a key factor of the determination of the influence vector of the realized innovation at the level of market power characteristic of both new and existing market participants. Possible effects of exposure of innovation activity on monopoly position of firms ? subjects in telecoms market are shown.