We’re told a competitive price should reflect marginal cost. But applying this can be harder than it sounds, particularly in industries such as electricity. How do we make sure Mums & Dads can afford their power, while also ensuring that the incentives are right for investment? It’s easy: you set the Goldilocks price. Not too high, not too low, but just right. But how do you know when a market is delivering the right price or in fact has a market power problem? We consider this issue in light of the ongoing review of generator market power in Australia’s National Electricity Market.