What is market concentration and how does it affect trade and economy?
Market concentration is related to the concept of industrial concentration, which concerns the distribution of production within an industry by a few select companies. Market concentration also indicates lack of competition, wherein a few firms set the price and many firms are not in a position to enter or operate in a fair manner. Market power gives agribusiness firms the power to affect prices and reduce competition that is essential for a sector of economic activity to determine and lay down standards. These firms squeeze farmers from both sides. They reach the food system revenue stream and extract very high returns. As their power increases, less money makes it back to the farm level. Market concentration also affects consumers mostly by dictating government regulatory policy, flouting pesticide residue norms in soft drinks and food items, and driving out the supply of important commodities from different regions. The firms encourage farmers to overproduce, resulting in low prices