Global competition and a vigilant Federal Reserve have left companies with precious little power to raise prices. But this year some small businesses think they'll be able to boost prices more than their bigger competitors -- and more than U.S. inflation -- a new study shows.

That's because small businesses are often in niche areas where there's less competition, says John Graham, assistant professor of finance at Duke University and director of this quarterly business survey by the Financial Executives Institute and Duke University's Fuqua School of Business. In contrast, large companies in mass markets are likely to have stiff competition from overseas. Graham adds: "Productivity seems to be increasing, so small firms seem to be able to get away with increases."

Companies with annual revenues of $24 million and less plan to raise prices by an average of 2.2%, compared with 1.4% for all the businesses surveyed, and 0.4% for concerns with revenues from $1 billion to $5 billion. In contrast, inflation is only around 1.5%. The survey looked at 350 ventures with annual revenues of up to $5 billion.

Small businesses will need all the extra revenue they can get, the survey suggests. That's because they'll bear a much larger increase in health-care costs in 1999 -- 5.3%, compared with a 4.2% average for all the businesses polled. What's more, small enterprises plan to increase capital expenditures by 8.3%, compared with 6.1% of all the companies.

By Jeremy Quittner in New York
Jeremy_Quittner@businessweek.com