When does a dominant position in a market typically arise?

A dominant position in a market typically arises when a business can act independently of competitive pressures. This means that the business has sufficient market power to influence prices, supply, or other market conditions without needing to respond to the actions of competitors.

In markets where a firm holds a dominant position, it often has a significant share of the market, allowing it to make strategic decisions that competitors may not effectively challenge. Such dominance can result from factors like brand strength, economies of scale, control over a supply chain, or having unique products or services that offer consumers limited alternatives.

The other options reflect situations that do not necessarily lead to monopoly or dominance. For instance, having many competitors typically indicates a competitive market rather than dominance. Similarly, while merging with another business could enhance market power, it doesn't guarantee that the resulting entity will have a dominant position, as it still may face significant competition. Lastly, having lower prices than competitors can be a strategy employed by firms competing for market share, rather than a clear indicator of dominance, as price alone does not dictate a firm's ability to engage independently in the market.