IntroductionIn this article, the effects of firms with market power on economic well-being will be briefly examined. The first part describes some of the negative effects of market power; the second illustrates some of the benefits of market power and the case of Microsoft is used to support these arguments. In conclusion, an overview of the role of competition authorities and competition policy is provided. Why is market power detrimental to economic well-being? Companies with market power or monopolies are often seen as detrimental to customers and economic well-being. According to neoclassical theory, the market power of monopolies and oligopolies is potentially greater than that of firms in monopolistic or perfect competition since they face very limited or no competition (Ferguson and Ferguson 1994). Under monopolistic or perfect competition, extraordinary profits may be made in the short term, but other firms will eventually enter the market and offer alternative products that reduce demand for the established firm's products (Sloman et al ., 2013 p. 177). Likewise, this is not the case for dominant companies or monopolies; the lack of competition allows them to set prices and make extraordinary profits, which increases the perception that big companies are “bad” for consumers. As the graphs in Figures 1 and 2 show, there are substantial differences between competitive and monopolistic markets. In a competitive environment, equilibrium is achieved where demand meets supply. In a monopolistic market, through setting higher prices and producing smaller quantities, monopolies or dominant firms achieve supernormal profits; furthermore, there is a deadweight loss and some consumers who were willing to pay lower prices will...... middle of paper ......ur; in such cases, competition authorities must act to combat illegal practices detrimental to economic well-being.ReferencesECIS (2009) Microsoft: A History of Anticompetitive Behavior and Consumer Harm http://www.ecis.eu/documents /Finalversion_Consumerchoicepaper.pdfEuropean Union Competition Law http://ec.europa.eu/competition/antitrust/legislation/handbook_vol_1_en.pdf Ferguson, PR, Ferguson, GJ (1994) Industrial Economics: Issues and Perspectives, 2nd ed., MacmillanPosner , RA, (1975) The Social Costs of Monopoly and Regulation, The Journal of Political Economy, Vol. 83, no. 4, pp. 807-828, The University of Chicago Press Sloman, J., Hinde, K. and Garratt D. (2013) Economics for Business, 6th ed., Prentice Hall / Pearson, Veljanovski, C. (2006) Cartel Economics. Finnish Competition Law Association, Konkurrenstrattslig Arsbok