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Australian Market Structures Assignment

   

Added on  2020-02-24

6 Pages1441 Words54 Views
Running Head: Australian Market StructuresOligopoly, Duopoly and Monopolies in AustraliaStudent NameInstitutional AffiliationCourse/NumberInstructor NameDue Date

Australian Market Structures2Oligopoly, Duopoly and Monopolies in AustraliaIntroductionThere are many types of market structures in which businesses operate in all nations. These structures are; competitive markets, oligopolistic, monopoly and monopolistic markets (Stiglitz, 2016). The difference between these markets is the size and numbers of sellers, type of product (could either be similar of differentiated), market power, etc. Oligopoly markets are many up of few number of sellers but among the few, there are giants who controls the market (McTaggart, Findlay & Parkin, 2012). Duopoly is the extreme case of an oligopoly market structure where two big firms controls nearly the whole market share. Monopoly market structure is a situation where there is only a single big supplier in the whole market (Australiancompetitionlaw.org, 2016). Depending on the number and size of the sellers, these three market structures have different market powers. Australia is known for operating in an oligopolistic market structure and thus this paper’s concern will cover mostly the oligopolistic competition. Perfect competition is the most effectivemarket structure since it leads to efficient output and prices; the other market structures have market powers of which sometimes is misused and brings about inefficiency. Understanding the market structures helps the policy makers in ensuring that competitiveness is promoted so as to discourage any behavior of misusing the market power. The paper will also create an awareness to the business people that they may face legal charges if they discourage competition in the market.Economic AnalysisThe issue of a market being competitive is the major concern of this paper. In order to clearly see some of the negative impacts of uncompetitive nature of Australian markets, the article “NBN to entrench broadband oligopoly: analysts” by Letts (2016) highlights some of the industries practicing uncompetitive market behavior. Some of the industries noted to operate in an oligopoly market is the telecommunication industry, Grocery and supermarkets, the Airlines and the banking sector; these are the industries in which most of the Australians depend on. Flynn (2013) argued for the Australian aviation industry Qantas and Virgin to be a duopoly. Thisarticle also covers the presence of entrance barriers and how they challenges the government’s objective of promoting competition. According to Klijn (2015), there are higher returns in operating in either an oligopoly, duopoly or monopoly market structure in comparison to the

Australian Market Structures3competitive markets and thus more preferred by most investors. However, the Australian Competition and Consumer Commission's (ACCC) has struggled in promoting competition in the markets by controlling the market powers. Fig: Biggest companies in AustraliaSource: McDuling (2015)The graph show that some of the biggest companies in Australia were founded many years ago. This explains the reason for their raised level of market power. Kollmorgen (2016) noted that the supermarket industry is a duopoly and highlighted that Woolworths and Coles control 73%. This is contrary to the same notion made by Shakibaei (2012) that the duopolies controlled 80% market share. The difference is explained by the increased competition in this industry.

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