Uncovering the Hidden Transaction Costs of Market Power: A Property Rights Approach to Strategic Positioning

Kirsten Foss, Nicolai J. Foss, Peter G. Klein

    Research output: Contribution to journalJournal articleResearchpeer-review


    A central construct in competitive strategy research is market power, the ability to raise price above marginal cost. Positioning research focuses on attempts to build, protect, and exercise market power. However, this approach contains hidden assumptions about transaction costs. Parties made worse off by the exercise of market power can negotiate, bargain, form coalitions, and otherwise contract around the focal firm's attempts to appropriate monopoly profits—depending on transaction costs. We build on property rights economics to explain how transaction costs affect positioning and offer propositions about successful positioning in an environment with transaction costs.
    Original languageEnglish
    JournalManagerial and Decision Economics
    Issue number3
    Pages (from-to)306-319
    Number of pages14
    Publication statusPublished - Apr 2018

    Bibliographical note

    Published online: 14 November 2017

    Cite this