what determines the level of market power a monopolist can exercise
Market power A firm usually has market power by virtue of controlling a large portion of the market. In extreme cases—monopoly and monopsony—the firm controls the entire market. However, market size alone is not the only indicator of market power. Highly concentrated markets may be contestable if there are no barriers to entry or exit, limiting the incumbent firm's ability to raise its price above competitive levels.
United States Postal Service Furthermore, some economists have argued that because public enterprises may pursue objectives different than profit maximization, they might have more of an incentive than profit-maximizing firms to behave anticompetitively through policies such as predatory pricing, misstating costs, and creating barriers to entry.[111] To resolve those issues, one economist proposes a cost-allocation model that would determine the optimal allocation of USPS's common costs by finding the share of costs that would maximize USPS profits from its competitive products.[112] Postal regulators could use such a cost model to ensure that the Postal Service is not abusing its statutory monopoly by subsidizing price cuts in competitive product markets with revenue obtained from the monopolized market.[113]