Market power and its measurement

Abstract

Addresses the importance of brands in the assessment of market power. Traditional approaches to assessing market power are fraught with problems because they ignore the power of brands, and are constrained by the classification of companies within domestic markets. Introduces a model for assessing market power which uses brand value as the basis of market power measurement. The model emphasises the importance of brands and acknowledges the international nature of markets. It has the further benefit of being forward‐looking rather than focusing on the past performance of companies. Using this model, it is suggested that within the UK beer market, the threat is from the owners of powerful non‐domestic brands rather than from large UK brewers. The analysis of the beer market represents a pilot study for the model proposed in the paper. The brand valuation model itself needs refining before the proposed model can be validated on a widespread basis.