Market power
Market power refers to the ability of an organization to control a product or a service in the market by influencing its demand, supply, or both .Market power is also known as economic strength. The companies which possess the market power are referred to as price makers, since they are the ones which determine the price of products and services in the market at a given time (Shepherd, 2014). The entry decision of the smaller network carrier to expand its products to the global network carrier will see it joining the well-established carriers which will play a great role in increasing its market power to determining the prices of the airline products and services (Milton, 2017). Connecting with the global network carrier will also enable the smaller network carrier to utilize the benefits which the global network carrier was enjoying due to its higher market powers such as higher profit margins. The smaller network carrier can be able to dictate more the prices of offered in the airline market and increase its sells capacity since it will have expanded its market by connecting with the Fortress hub, which is a global carrier.
The Fortress hub which is a global network carrier, it will greatly benefit from the decision of the ‘hub and spoke airline’ to connect it to expand its products by connecting to the global network carrier since it will increase the range of products and services they hence they will increase their market power and have more command in the airline market.
References
Milton, G. (2017). Market Power: Lordship, Society, and Economy in Medieval Catalonia . Londom: Springer.
Shepherd, W. G. (2014). The smaller network carrier can be able to dictate more the prices of offered in the airline market and increase its sells capacity since it will have expanded its market by connecting with the Fortress hub . California: the University of California.
