Market power and sustainability: a new research agenda

Abstract

Perfectly operating markets only exist in theory. Market failures are known to not only inhibit the proper functioning of the market, but also affect sustainability and thus a sustainability transition. In this regard, much attention has been paid to externalities or missing markets, even though these are not the only market failures. In this paper, we argue that market power and its relationship with sustainability has been neglected, despite the fact that, back in 1931, Hotelling indicated the connection between the two concepts. However, research that has been dealing with this connection has not been comprehensive and has only looked at one aspect of sustainability and market power. Due to the rising relevance of market power as well as of sustainability concerns, the connection between the two deserves thorough attention. Accordingly, we propose initiating a new interdisciplinary research agenda to comprehensively analyze the complex relationship between market power and sustainability.