Economic power is the ability to control economic decisions through accessible resources. It can be used to influence the economy through purchasing power, bargaining power, or monopoly power, and can bring positive or negative change.
Economic power is the ability to exercise control over the type of economic decisions that are made, typically due to the range of resources that are readily accessible for use in manipulating the course of the economy. In the case of power wielded by a nation, this means having the ability to influence the direction of the economy, by choosing how the nation’s resources are employed in the economic endeavor and how goods and services are allocated. As part of the overall process of using economic power, a number of different approaches can be used to ensure the desired outcome.
Sometimes, economic power is seen more as a broad category of more specialized powers that can be used to influence the direction of the economy. For example, the purchasing power held by a company or entity can be the instrument used to trigger changes in economic trends. With this application, choosing to purchase multiple products associated with a particular market or group of markets can help reverse the effects of a recession or slow the advance of an inflationary period. At other times, choosing to refrain from purchasing goods within a given market may in turn weaken that market’s influence on the overall economy, hopefully restoring some degree of equilibrium.
Economic power can also manifest itself as bargaining power. With this application, one or more entities are able to negotiate terms that influence the future direction of the economy. Companies operating in the same industry can bargain to develop a standard price agreement that is beneficial to all concerned, or a nation can negotiate with industry to establish standards that help ensure that citizens can afford the goods and services provided by such industries.
Another manifestation of economic power is monopoly power. In this scenario, a selected entity or entities control the supply and prices for goods and services. This is in contrast to a more competitive market where multiple entities seek to secure market share and compete both in terms of price and availability of goods and services in order to meet consumer needs and expectations.
Economic power can be used to bring about positive change within an economy or it can be used to serve the interests of a relatively small collective of individuals, businesses, or even nations. At best, the judicious use of this kind of power helps create more favorable situations for all concerned, stimulating the economy and making it easier for consumers to acquire essential goods and services. At the same time, economic power can be used to marginalize some of the players within the economy, a situation that is likely to produce negative results in the long run.
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