What is cornering the market?

If an individual or company is said to have “cornered the market”, it’s acquired a majority share and can directly influence market conditions.

Where have you heard about cornering the market?

In 2008 luxury car manufacturer Porsche cornered the market by steadily building up its shares in Volkswagen, thus driving up the price. As a result, Volkswagen briefly became the world’s most valuable company. While initially Porsche had planned to buy Volkswagen, it couldn’t afford to purchase all of the stock so in the end Volkswagen bought Porsche.

What you need to know about cornering the market.

In the finance industry, cornering the market can occur when almost all of a stock, asset or commodity is bought in order to increase its sale value. When a company or entity has enough control, it’s able to dictate the price and challenge competitors without fear of losing business.

Larger companies can corner a market legally, however using illegal trading to manipulate the market is a crime punishable by law.