Monopoly, Oligopoly and Duopoly - An Economic Analysis

This case study provides an economic analysis of Monopoly, Oligopoly and Duopoly and their impact on the Australian industry. It discusses the advantages and disadvantages of each marketing theory and suggests policies to mitigate the issue of unbalanced marketing strategies. The study also highlights the need for the Australian government to implement policies to regulate prices and increase competition in the market.

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MONOPOLY, OLIGOPOLY AND DUOPOLY
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Australia is among the world’s most advanced country in industrialization.
Industrialization is a large enterprise entity that is actively engaged in industrial professional and
commercial activities. An industry is involved in transacting its activities such as manufacturing
goods and providing services to their customers. The main aim of a business industry is to
maximize on profit but there are other businesses that are nonprofit based and are meant for
charitable missions (Webster, 2014).For an industry to be successful, marketing strategies
should be adhered to and most importantly the business market.
Economic theories have helped industrial owners to have a better consideration of the
real-world business associated problems by using economic reasoning to maximize on their
profit. In industrialization, business market is a term that refers relationship between a seller and
a buyer. It includes the selling of products and offering of services to potential business owners
to be consumed or to be assembled to make new products. Monopoly, oligopoly and duopoly are
examples of business fields that comprehend the relationship between the sellers and the buyers
in a market field (Hasbro, 2012). To start with, this is an interesting case study that outlines the
relationship that is there in the market. As an upcoming business owner it is important to be
conversant with the type of relation you ought to imply on in your marketing field. Depicted
below is an economic coherent analysis on Monopoly, oligopoly and duopoly based on the
relationship between business owners and the customers and how they affect the Australian
industry.

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Monopoly
Monopoly is a market structure which has many buyers but only one seller. To get a
better understanding of monopoly, we will look at its description (Hasbro, 2012) Monopoly is a
marketing field that has a single seller, selling their unique products to multiple potential buyers
in the market. In this kind of market, the business owner faces no competition since he/her runs a
sole proprietorship business thus maximizing their profits. One of the advantages associated with
monopoly is that the owner of the business controls the price in the market of his/her products or
services. Monopolies emerge as a result of industries large-scale production of goods and
services thus making the long-run average of production of cost to fall. This makes monopoly to
emerge naturally because of the connection between the scale of operation and the average cost
(Hasbro, 2012).Below is a diagram that shows an industry in Australia with economic scale. The
diagram reflects that as output escalates, the run average cost drops.

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Many industries in Australia have embraced monopoly in their day-to-day running of
their firm. An example is a steel industry which is a large-scale industry opt to implement
monopoly as its marketing strategy because it wants to return it building up capital by fixing high
cost on its products while producing more steel this lowering the average rate per unit of steel.
Monopoly has an advantage competitive strategy over other companies producing a similar
product (Hasbro, 2012). Despite this it comes with some cons. There are reasons why monopoly
is bad for Australian economy since it prevents the market from setting prices and restricts free
trade thus causing the following effects. Industries using monopoly marketing strategy are lone
providers and can set any price for their goods and services as they wish. Gasoline industry in
Australia is a good example where their drivers could adjust to transit but most of them cannot.
This is as a result of inelastic demands of their service thus fixing their prices high.

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(Hasbro, 2012).
Gasoline industry in Australia encounters effects on economic as a result of employing
monopoly as illustrated by the graph above.
Oligopoly
An oligopoly involves the compound intertwining of small companies within a large
industry (Kemp, 2016). An oligopolistic industry is considered as a big industry that is
dominated by few associates who are reliant upon the products, the investments and the
transitions occurring within the companies. Inherent associated with oligopolistic are problems

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with price-fixing, monopolies and collusion. In Australia this structure, the oligopoly is shared
by small producers and comes with the following advantages; it creates high products profits by
creating a trickle-down effect within the Australian industry (Braverman, 2013). The price fixing
provides high profits, which in turn filter down the wages of employees. The second pro with
oligopoly is that it simplifies the market competition for consumers. This helps the customers to
have an easy choice when finding the possible product in the market
Effects
Despite the mentioned above pros with oligopoly it also have some cons that includes the
following; fewer choices for customers to choose from since no product meet the end consumer
needs. Another shortcoming associated with oligopoly theory is that innovation becomes non-
existent. This marketing theory discourages innovation where numerous strategies creates
barriers to innovation. Price fixing is also another con that is brought about by oligopoly theory
(Kemp, 2016).
Policy
From the above description of the marketing theory in Australia it vividly clear that
business owners are maximizing their profits while the end user is suffering from the raised cost
price of products. As depicted from the Gasoline industry, people in Australia have no option but
to come to an agreement with the high cost offered by the company. It’s arguably true to say that

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the Australian government should impose some policies to mitigate this alarming issue of sellers
gaining more profit at the expense of the consumer.
.
Recommendation
When it comes to monopoly theory the Australian government ought to implement the
following policies; (1) liberalization of markets. This policy will deregulate the market by
allowing near firms/companies to enter and compete in the market. (2) Regulation of prices. The
government should regulate prices by introducing taxes to monopoly industries. (3) Break up
existing monopolies. This will effectively increase competition in the market since all industries
will be having a fixed price (Webster, 2014).

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Conclusion
The Australian industrialization should implement the above mentioned policy to
eradicate the issue of unbalanced marketing strategies. From my case work above it arguably
true to say that some of this marketing theory favor the business owner only while the consumer
suffers at the expense of the seller maximizing their profits. Economic in Australia is not
sustainable for near firms to grow thus the government should foresee the implementation of
marketing policy.

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References
Braverman, H. (2013). Labor and monopoly capital: The degradation of work in the twentieth
century. NYU Press.
Hasbro. (2012). Monopoly and Product Quality. London: Macmillan.
Kemp, T. (2016). Indusrtialization In Europe. London: Macmillan.
Mitsuyoshi, Y. (2017). The theory of mixed oligopoly; Privation, transboundary activities, and
their applications. tokyo: Springer.
Webster, T. (2014). Magerial economic. Amsterdam: Academic press.