Comparing Individual Economic Circumstances in Canada and the Philippines: A Case Study

This paper explores the differences in individual economic circumstances between Canada and the Philippines, focusing on the impact of market structures. Through an interview with a Filipino immigrant living in Canada, the paper examines the prevalence of perfect competition and monopolies in both countries. It analyzes the characteristics of each market structure, including their impact on pricing, competition, and overall economic well-being. The paper concludes by highlighting the importance of understanding market structures for policymakers and individuals alike, as they can significantly influence economic outcomes.

Final Project: Applying Key Concepts to a Comparison of Individual Economic
Circumstances in Canada versus Some Other Country (Philippines)
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Contents
Overview of an Interview:.........................................................................................................3
Market structure:........................................................................................................................5
1. Pure market competition....................................................................................................5
2. Monopoly:..........................................................................................................................6
A situation of monopoly market and perfect market competition in Canada:.......................8
A situation of perfect market competition and Monopolies structure in the Philippines:.....8
References:.................................................................................................................................9
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Overview of an Interview:
An interview will have to be conducted to acknowledge the functions, significance and
differences between perfect competition and monopoly market. James Luther will be there to
host and start the whole interview process. Mr George will join in this session as Interviewee
for discussing market impacts based on perfect competition and monopolies.
Interview:
Perfect Competition vs. Monopolies
James: Hello! Mr George and Mr. Anderson
Mr George: Hello, James.
James: what do you understand from a market structure? Which kind of market structure
your origin-country possess?
Mr George: Any profession in economics needs the understanding of the basic market
structure of their own country. A market structure includes basic characteristics and
organisational changes in a market which starts from focusing on nature of pricing and
competition to simplify market share regarding firms. My native place is the Philippines, as
per market trends; there have both situations of perfect completion and monopoly market.
James: Can you give some examples of monopoly market in regards of Philippines?
Mr George: a large number of single investors of their private capital reflect nationality of
monopoly market in the Philippines. Electricity and transportation services cover monopoly
market. Meralco's transportation is the example which established in decade 1904. After
establishment, Meralco's covers 80% monopoly market, 10% of electricity and 10% of
railway sector.
James: Does government take initiative in management of monopoly market structure?
Mr George: there two kinds of monopoly structure in the Philippines: 1. Regulated
Monopoly and 2. Non-regulated Monopoly, in regulated monopoly local government has the
power to control and posses the market, for instance, electricity and railway sector.
Government is recently covering 20% of monopoly market share in the Philippines.
James: What do you understand from perfect competition market?
Mr George: In the situation of perfect competition where lots of buyers and sellers and they
are well aware of all components of monopoly are not present. In this structure, sellers are the
price taker and determination of products prices are beyond their control.
James: the Philippines is a country of industrialisation, so what are the remarkable areas
which are related to perfect market competition?
Mr George: Yeah! It is an industrialised country and lots of firms are engaging in perfect
competition markets such as retail trade, restaurants, clothing sectors and gasoline stations
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etc. there is the great number of wheat farms, with similar standards and no control over
prices.
James: as you are currently living in Canada, so what is a basic difference in the market
structure of both Canada & Philippines?
Mr George: in the Philippines, Monopoly structure is basically segregated into two parts:
regulated and non-regulated monopoly. But in Canada, there is nothing like that. In the
regulated monopoly, the government allows companies to set prices at expected return; the
example of this is Meraclo's Electric Department and Unit and in Canada, companies
basically focus on export-import, telecommunication, electricity and other service
municipalities. Trucking and railroad companies have become monopolies after interstate
Commerce Commissions establishments in 1887. In the market of steel and oil, Carnegie
Steel Company and Standard oil are another example of monopolies after the 20th century.
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As per defined in the interview, that both countries whether Philippines or Canada, both have
their own market structure that is based on demand and nature of the business. This easy
reading will provide an acknowledgement of perfect competition market and monopolies
market structure and their specific function in the context of Philippines as compared to
Canada.
Market structure:
Market structure can be well defined as a place where there are lots of buyers and sellers in
exchanges of products at availed market prices. It covers organisational and marketable
characteristics which affect the nature of pricing and competition in the market.
Market structure is of following types:
1. Pure market competition: These kinds of the market structure refer to lots of buyers and
sellers considering to similar and uniform commodity like wheat, zinc, minerals or financial
securities. In such market, no one has right to influence market price. The seller has no much
control over price than the going price in the market (Mahoney & Weyl, 2017).
Characteristics:
 There is the large number of buyers and sellers trading for a uniform commodity.
 The overall output for all of the firms is homogenous. Firms are free to enter and exit in the
new market as well but small marketers have no power to control market efficiently.
Changes in Perfect Competition equilibrium:
Long run process:
The existing equilibrium due to economic profit attracts more entries of new firms and
economic loss tends to market exit of existing firms. In the long situation of long-run
equilibrium, firms basically observe and liable to attain Zero economic profit with a perfectly
competitive scenario. In the below-shown diagram, it is described that long run supply curve
cannot change input prices due to constant cost in the industry known as the horizontal line
(Mahoney & Weyl, 2017).
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Long run profit and loss in perfect competition:
(Source: Fabella, 2017).
Panel A describes eliminating economic revenue in the situation of the long run and make
easy for firms to enter the market.
Panel B: Single firms' profit and revenue are represented in the shaded phase and entry of
firms would be continued until firms in the market are engaging in an operation of the
business at the lower point at a respective average curve of total cost and profit falls down
and reach at zero (Fabella, 2017).
Short run process:
In the perfect competition market, the situation of short-run supply curve would be equal to
marginal cost (MC) at above shutdown point. Maximum profit in the situation of a short run
process is determined by firms as per prices and production output level that result in
maximum profit. In the short run, firm produces until the marginal cost would be equal to
marginal revenue. The firm will tend to continue its production until marginal cost equal to
zero. & marginal revenue would equal to that point where marginal profit minus marginal
cost (Acemoglu, et. al., 2017).
Short run process profit and loss in Perfect completion
(Source: Llanto & Gerochi, 2017).
2. Monopoly:
In this market, it has sole proprietorship of goods and service, in other words, those services
and resources which have no other substitutes and close homogenous product, this market
deals in sole supplying authority. In a market mechanism, the industry including single firm
to produce goods and services, much control over prices, are known as the pure monopoly
(Llanto & Gerochi, 2017).
Characteristics:
 Control over price. Traders have possession to changes prices of their products.
 No substitute available in the market.
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 Entry and exit of new firms are rejected and basically prohibited.
Monopoly market seeks to maximum to maximum profits by setting production output at the
point where the Marginal cost would be equal to marginal revenue. As per given in the below
diagram output would be QM and price equals to PM. It shows the comparison to the
competitive market in which monopolist increases in prices to control output.
Monopoly competition
(Source: Medalla, 2017).
(Red area represent supernormal profit (AR-AC)*Q
(Blue area indicates deadweight loss (combined loss of producer & consumer revenue
comparing to the competitive market.
In diagram represents that monopoly has the capacity to earn supernormal profit where price
AR>AC. This attracts more firms to enter the market but barriers to entry in monopoly would
make able to manage the supernormal profit.
Long run average profit (Economies of scale):
In the situation of long-run average profit in the monopoly market, it assumes that
monopolies attain the degree of economy of scale that makes liable to a trader to create more
benefits from long-run average cost. But in the competitive market, traders might be
produced quantity (Q2) and obtains another average cost (AC2) to enhance the efficiency of
economies of scale.
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(Source: Askar, 2013).
A situation of monopoly market and perfect market competition in Canada:
In Canada, it is becoming difficult to identify competition structure among Canadian
industries. Basically, Canada is the country where most firms are run by sole proprietors. In
Canada, the market structure is categories in a large number of small companies but no
identical knowledge of specific products. There are no barriers to entry and exit of other new
firms. Most companies are market takers. But in the case of monopoly market structure in
Canada, monopoly traders are single sellers and sole producers. They are price makers and
produce no substitute goods such as electric companies, water companies and natural gases
etc. Example of monopolies in Canada is Toronto Blue Jays, Toronto Raptors, and Toronto
Maple Leafs. Example of outside monopolies is Canada Intel’s Microchips that covers 80%
market share in overall Canada (De Quidt, et. al., 2016)
A situation of perfect market competition and Monopolies structure in the Philippines:
The market structure in the country Philippines is not much different from Canadian
industries' market structure. In the monopoly market, Philippines deals in Railways, electric
and transportation services systems. Meralco's electricity services and systems are the
greatest examples of monopoly market structure in the Philippines then transportation
services started by him in 1941 with the great improvement (De Quidt, et. al., 2016).
Meralco's street railway systems are another example in monopoly market which is
associated with 40 miles track crossing of the business section, Manila. The government
gives its 100% contribution by initiating and regulating in the part of regulated monopoly
(Garcia & Baraguir, 2015). It permits traders to set certain prices to yield fair and expected
return. In the situation of perfect market completion Philippines firms basically focus on
crops, wheat, copper and minerals etc. no single buyers and sellers would be ready to affect
market price. Example of pure competition in the Philippines is wheat firms with a
homogenous product of wheat and standardized products (Tamayo, 2016).
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Therefore it is concluded that the market operation if any country brings out best and
attractive results when there would be pure competition according to a market economic
situation. It is the situation in a large number of producers is engaged in producing similar
products which exercising dominant existence and influence over the market. In this essay
reading, a proper explanation has been given regarding monopoly and perfect competition
structure in the context of both country Philippines and Canada. In both of the country, the
pure competition market structure would lead it to manufacture their goods and services at
competitive prices, whereas in monopoly structure profit making is based in sole
proprietorship if traders and monopolies.
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References:
 Askar, S. S. (2013). On complex dynamics of the monopoly market. Economic
Modelling, 31, 586-589.
 Garcia, F. G. N., & Baraguir, S. Z. (2015). Market Structure and Conduct of Oil Palm
Milling Industries in Region XII and ARMM, Philippines. USM R&D Journal, 23(2).
 De Quidt, J., Fetzer, T., & Ghatak, M. (2016). Market structure and borrower welfare
in microfinance.
 Tamayo, A. (2016). Social Market Economy, Government and Philippine
Development: Introductory Concepts to Social Market Economy.
 Medalla, E. M. (2017). Understanding the principles underlying the Philippine
competition law.
 Llanto, G. M., & Gerochi, H. A. (2017). Competition for the market: A policy
framework for improving bus operation along EDSA (No. 2017-10). PIDS Discussion
Paper Series.
 Fabella, R. V. (2017). Competition, regulation and institutional quality (No. 2017-
01). Discussion Paper, School of Economics, University of the Philippines.
 Garcia, E. M., Caboverde, C. E. C., Caliso, R. A. C. C., & Francisco, J. P. S. (2017).
Leveraging Competition Policy for SME Development and Shared Prosperity.
 Mahoney, N., & Weyl, E. G. (2017). Imperfect competition in select markets. Review
of Economics and Statistics, 99(4), 637-651.
 Acemoglu, D., Kakhbod, A., & Ozdaglar, A. (2017). Competition in Electricity
Markets with Renewable Energy Sources. Energy Journal, 38.
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