Different Types of Market in Australia and Government Intervention in Economy

This article discusses the different types of markets in Australia, including Monopoly, Oligopoly, and Monopolistic Competition. It also explores the government's role in the economy and the arguments for and against government intervention. The article provides examples of companies in each market and their strategies for success.

Contents
Introduction................................................................................................................................1
Different Types of Market in Australia......................................................................................1
Monopoly Market.......................................................................................................................1
Oligopoly Market.......................................................................................................................2
Monopolistic Competition Market.............................................................................................3
Government Intervention in Economy.......................................................................................4
Arguments for government intervention....................................................................................4
Arguments for government intervention to improve equality....................................................5
Conclusion..................................................................................................................................5
Reference List:...........................................................................................................................7
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Introduction
In the current Australian business environment, if a review is done on business industries,
then Monopoly, Oligopoly and competitive market based on monopolistic competition will
be found. The operation management of different organizations can be identified by the study
of different market structures. The article has reflected the operations of the monopolistic
market of Australia Post and the result of the same on SMEs. In this paper, the recent position
of the new business in the Australian Postal industry and the current business position of the
SMEs can be analyzed with the help of the strategic moves of Australia Post. Moreover, for a
detailed knowledge on the structures of different markets, a discussion with explanation on
the three different market structures of Australia is necessary and considerable in this paper.
In the article, the tactics that are based on anti-competitive situation of the monopoly business
structure has been explained for notifying the business concepts of some business units.
Another article is the one that will discuss about the future of the structure of oligopoly
market in Australia. It is understandable that there is an increase in the modern corporate
rivalry, which has been contributed to the breakdown of the structure of oligopoly market
structure in the country. Therefore, it is necessary to face competitive challenges in the
oligopolistic market competition for being a business leader. It is to be noted here that many
companies in the oligopolistic market are facing challenges to survive.
Different Types of Market in Australia
After studying and considering the points in the article, it can be said that there are different
types of market in Australia (Crawford, 2016). The markets have been formed based on the
capacity of the seller and the mechanisms of price along with the demand and supply in the
market. Moreover, it has also been noticed that the markets – monopoly, oligopoly and
competition based on monopoly market are existing in the economy of Australia.
Monopoly Market
Based on the monopoly features, it has been noticed that Australian Post operates business in
a monopolistic ways in Australian market. Any private postal company is not allowed to
deliver any parcel to the post offices owned by the government. The expansion of the private
postal companies is controlled by it in the economy (Lovelock & Patterson, 2015). The
Australian Post hurts the small businesses in the market by not allowing them to do business
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independently. Hence, the Australia Post is supported by the price and control for ruling in
the industry. Apart from the Australia Post, Water Service, Railway Service of Australian
government also operates with monopoly policy in the Australian market.
Figure: Monoply
The Commonwealth Government has the sole authority for deciding the prices of the service
because there is no other competitors exist in the market. The customers are force to buy
these services as per their necessity and they have no other option to buy services. Hence,
from this scenario, the evidence of the monopoly business can be seen in the Australian
market. The monopoly market leaders do not allow the other players in the market to provide
service in the industry in which they rule. When one business firm operates at a lower cost
than the other competitors do, then monopoly business exists in the market. The entry barriers
can be legal, economic, geographic and some others. In absence of any competitors, a
monopoly business unit can rise price, create artificial demand and thus, can exploit the
customers. Tariff protection, licensure are related with typical monopoly.
Most of the monopoly business units provide products and services at lower costs due to the
government pressure (Banks, 2018). The marginal cost of monopoly can be brought down
with the help of subsidy. Some restrictions can also be imposed on the possible competitors
for raising their marginal costs of products or services. Licence and intellectual properties are
the two weapons through which competition can be restricted.
Profit making strategies: All the short run business units that are competitive in the
monopoly market must survey and follow the short-run and long run strategies. All business
units without considering their market structure should make a minimum production at which
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level marginal revenue is equal to marginal costs (Wilson & Wilson, 2017). These costs mean
cost based on the economy like accounting, opportunity costs and some others. The demand
curve that is downward sloping is applicable to monopoly competition because the monopoly
business units can make the price of products and services.
Oligopoly Market
From the analysis, it is clear that there is Oligopoly businesses in the Australian market. In an
Oligopoly business, there is no price difference and the prices are similar for similar products
(Myatt & Wallace, 2018). The examples of Oligopoly business in Australia are Coca-Cola,
Dulux, Kelloggs, Carlton, Dunlop and others. It has been noticed that when price raises all
business units follow the same policy for avoiding price wars. The Trade Practices Act was
introduced by the government of Australia in 1995 for safeguarding the customers from
various business malpractices in the oligopoly business market. Apart from that, the law
helped to keep a balance for mitigating the intensity of competition. In oligopoly market, a
small number of suppliers controls a significant share of supplies. In such a case each of the
suppliers are to be considered separately to understand the reactions of other suppliers. In
oligopoly market, the product manufacturing is homogeneous, for example, in aluminium
industry or in cigarettes or in automobile industry. It is to be noted that due to the necessity of
huge capital, very few companies are interested in the industries like oil refinery or steel
production industry.
Some industries require extraordinary marketing or technical skills that many competitors are
unable to avail. In an oligopolistic market, the business units try to avoid price wars for being
the same a costly to all the business units involved in the business (Guichardaz, Bach &
Pénin, 2016). For example, in Australia, the name of Toyota, Ford can be taken. The analysis
of Oligopoly business in Australia says that the Oligopoly business in Australia is about to
die. The government allows the new competitors in the market and this is increasing the
rivalry in the market. It also creates a price war for surviving in the market. Hence, Australian
market can be considered to be fully competitive in the current situation.
Monopolistic Competition Market
It is necessary to make an analysis for the understanding of the status of the competition
market after identifying the existing monopoly and Oligopoly market structures in the
business industry in Australia. In the current situation, some large business units in the
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oligopoly market have been forced to follow the competitive business structure due to acute
competitiveness in the market (Mandler, 2018). In Australia, retail industry, health and social
care sector, financial sectors, food industry, educational institutions, telecommunication
sectors all are following competitive structure. With the globalization and technological
growth, all the companies are fighting for their survival.
All the companies are applying marketing strategies, smart pricing strategies, additional
modes of services to meet customers’ satisfaction and to gain competitive advantage in the
market (Schmidt, Spann & Zeithammer, 2014). Some oligopolistic business like coal
companies, mining companies, oil refineries have resorted to the path of competition policy.
Apart from these, massive changes in the market and in digital technology have made
significant changes in the business market with the changing demands of customers. Thus,
the business units have become competitive to face various challenges. Many of the
oligopolistic companies have made significant profits from their business and thus, they have
become competitive. As a result, the customers in Australian market have been benefitted by
selecting products and services according to their choices and requirements from different
business players in the market.
Figure: Perfect Vs Monopolistic Competition
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Government Intervention in Economy
It is an important question in economics that to what extent the government would intervene
in the economical matter. According to the opinion of the economist of free market, the
government should intervene with a limit as it tries to allocate resources inefficiently. The
others opine that the government should strongly intervene in different fields (Wilde, 2017).
Arguments for government intervention
1. Greater quality– Redistribution of income and wealth is done for the improvement of
equality of opportunity and outcome equality
2. Failure in the market- Failure of market is for taking into account the externalities. For
instance, the government can allow subsidies and others.
3. Intervention of macroeconomic- the intervention is for the purpose of overcoming
recessions and for reducing unemployment in the country.
Arguments against government intervention
1. Government is liable for taking wrong decisions – Sometimes, government is influenced
by political groups and spend on unfruitful projects that derive unprofitable outcomes.
2. Personal freedom – Individual decision is taken away by the government on the grounds
how to spend and how to act. Some personal freedoms are prejudiced by economic
intervention.
3. It is prudent to decide how to produce and at time to produce in the market.
Arguments for government intervention to improve equality
Inequality of wealth, income and opportunity can be found in a free market. The government
should intervene for redistributing income in the society.
Marginal return diminish to income: According to the law of diminishing return the
diminishing marginal utility arise with the increase of income. If a person income $2 in a
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year, an increase in income of $2.5 million can be considered fair. For instance, a third sport
car provides a meagre increase in the total unity.
Fairness: inequality cannot be created by ability and hard work in a free market but it can be
created through monopoly power. If the government do not intervene, the monopoly business
units can give lower wages to its workers and can charge high prices to customers. Without
government intervention, the monopoly power will arise (Kennedy et al., 2017). Government
intervention can limit monopoly and control competitiveness. Hence, equality in income can
emerge with the help of government intervention and that will be fairer.
Wealth that is inherited: Often the argument is made on the point that people should get
rewards of their work. Wealth tax can make a balance of the wealth of the rich and this
wealth tax can be spent for the education and other welfare of the poor (Steptoe, Deaton &
Stone, 2015).
Rawls’ social contract: The Rawls’ social contract states that an ideal society is that in
which a man can be happy in any situation irrespective of other factors. No man would be
interested to be born in a free market because here, the minority of population are given the
rewards. If people have no idea about the fact where they will be born they will definitely
choose a society where government intervenes and redistributes.
Conclusion
While drawing a conclusion on the competitive study of Monopoly, Oligopoly and the market
structure of monopoly, the performance of different organizations that are operating in
sectors is to be highlighted. For example, business model based on the monopoly in Australia
has a great influence on the SMEs working in the industry. For this, in the Australia Post, the
dominance of monopoly has been retained. In another scenario, in the Oligopolistic market, a
large number of competitors have entered due to rivalry in the market. Hence, some new
modifications are to be adopted in the oligopolistic for controlling the business status of
oligopolistic business in the Australian market.
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Reference List:
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Crawford, R., (2016). Opening for business: A comparison of J. Walter Thompson and
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Guichardaz, R., Bach, L. & Pénin, J., (2016). Music industry intermediation in the digital era
and the resilience of the majors’ oligopoly: The role of transactional capabilities (No.
2016-47). Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
Kennedy, T., Rae, M., Sheridan, A. & Valadkhani, A., (2017). Reducing gender wage
inequality increases economic prosperity for all: Insights from Australia. Economic
Analysis and Policy, 55, pp.14-24.
Lovelock, C. & Patterson, P., (2015). Services marketing. Pearson Australia.
Mandler, M., (2018). Piracy versus monopoly in the market for conspicuous
consumption. The Economic Journal, 128(610), pp.1257-1275.
Myatt, D.P. & Wallace, C., (2018). Information Use and Acquisition in Price‐setting
Oligopolies. The Economic Journal, 128(609), pp.845-886.
Schmidt, K.M., Spann, M. & Zeithammer, R., (2014). Pay what you want as a marketing
strategy in monopolistic and competitive markets. Management Science, 61(6),
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Steptoe, A., Deaton, A. & Stone, A.A., (2015). Subjective wellbeing, health, and ageing. The
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Wilde, P.D., (2017). Economic restructuring and Australia’s changing role in the world
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Wilson, C. & Wilson, P., (2017). Make poverty business: increase profits and reduce risks by
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