A wheat farmer in Saskatchewan does not “compete” in any real way with
a wheat farmer elsewhere in the world. However, both exist in what
economists call a perfectly competitive market.
hansenn/Fotolia
The difference between the wheat farmers and MasterCard or Visa is the
degree of market power. Each firm that is producing wheat is an
insignificant part of the whole market and thus has no power to influence
the price of wheat. MasterCard and Visa, on the other hand, have power
to influence the credit-card market because each firm’s sales represent a
significant part of the total sales of credit-card services.