Final answer:
The power referred to in the question is that of the buyers, who influence market conditions by demanding lower prices or higher quality from producers. Their demand can instigate more competition in the market, and in oligopolies, competitors often react quickly to price changes, exemplified by the kinked demand curve.
Step-by-step explanation:
The power of buyers is the pressure they can put on the margins of producers in the industry by demanding a lower price or higher product quality. This principle reflects the dynamics of market forces where consumer demand influences the behavior of producers and sellers within an industry. When consumers demand more goods than are available on the market, prices are driven higher and the opportunities for profit induce more suppliers to enter the market, producing an amount equivalent to that which is demanded.
In the context of oligopolies, firms keep a close watch on competitors' production and pricing strategies since they cannot legally bind themselves to act as a monopoly. Should one oligopolist reduce prices, others in the cartel are likely to match these cuts to maintain their market share, illustrating the concept of a kinked demand curve. This behavior reinforces the significant role buyers play in influencing the market, particularly in oligopolistic environments where a few firms dominate the market and are interdependent.