Price Wars In the Past Decades

RUNNING HEAD: ECONOMICS 0
MACROECONOMICS: PRICE WARS
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ECONOMICS 1
Part A Microeconomic
Q.1
Coles and Woolworth operate in oligopoly market structure where these two companies
control the market share of vegetables and fruits in Australia (Rodney & Varcoe, 2016).
The majority of the market share of the vegetables and other eatable products lie in the hands
of these giants. In the past decades there had been various wars between the two supermarket
chains on the basis of prices and quality of the products offered. Sometimes the sales of
Woolworth surpass the Coles sales while in other time Coles sales surpasses the Woolworth.
Many times, Woolworth is the one that dominates the market when compared with Coles.
These supermarket chains have solidified their position in the market thus leaving no space
for other companies to come and build their position in the best possible manner. in past,
many firms have tried to enter but they were not able to enter in the market place due to the
set barriers. But recently, Aldi had tried entering in the market area of the two companies thus
giving competition to the companies. According to Rodney, Oligopoly market structure is
about the ever continuation of the war between the companies (Rodney & Varcoe, 2016) .
In the case study, the price discount wars between the companies have made Coles to capture
the market share by reducing the prices of its products (Teravainen, 2018).

ECONOMICS 2
(Teravainen, 2018)
Q.2.
As according to the case study, there is serious war going between the supermarket chains
that are Woolworths and Coles based on the market shares of the company. The changes in
the prices of the product will result in the consumers shifting form one supermarket giant to
another supermarket giant. Moreover, the profitability and revenue growth of the companies
will be affected hugely as they would be investing a lot to decrease its prices by aggressive
marketing campaigns which will require high expenditure to control it. It will result in high
level of disturbances between the market supply of the companies to the target consumers.
It is not in the interest of Woolworths and Coles to have price discount wars as it will going
to affect the huge industry badly. Due to the price discount wars the interests of farmers and
other people will be ignored negatively. The farmers and other members will be paid low
with the motive to decrease the cost of production thus affecting the chain of the food chain
negatively. It is important for the supermarket chain to play safe so that the interest of every
party is taken into account.
Q.3