How Do Competing Mining Pools Influence the Average Transaction Fee?

Competing mining pools generally drive up the average transaction fee by creating a competitive market for block space. Each pool seeks to maximize its revenue, leading them to prioritize the highest-fee transactions available.

This collective action sets the market price for confirmation speed. However, if a pool has significant market share, it could potentially manipulate fees, though this is difficult in practice due to the open nature of the mempool.