Glossary (Body of Knowledge on Infrastructure Regulation)

Dominant firm:: A firm able to act relatively independently of its competitors in terms of pricing or output decisions. Dominance has to be assessed within the context of the degree of competition in a relevant market. For example, a dominant firm generally cannot totally ignore the reactions of rival firms, including a competitive fringe. Such a firm might have a large share of total sales, which allows it to set prices to maximize profits while considering the supply response of smaller firms (the competitive fringe).

Interactive Glossary