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The Impact of Price War Competition by the Australian Supermarket Giants

   

Added on  2020-03-16

8 Pages1993 Words389 Views
Running Head: Oligopolistic Competition in AustraliaThe Impact of Price War Competition by the Australian Supermarket GiantsBy (Name)(Tutor)(University)(Date)

Oligopolistic Competition in Australia2Summary There is an oligopolistic competition in the Australian supermarket industry; this is the reason why there are price wars. The industry is made up of only a few players where some are large and others are small (Stackelberg, Bazin, Urch and Hill, 2011). Thus, competition is inadequate and the industry has an ability to influence both the price and output. In this industry, the most common competition is on price basis (McTaggart, Findlay and Parkin, 2012). There are a few supermarket giants that are the leaders to any price change; an example provided by Smith (2015) is Woolworths and Coles. The most common price strategy is to lower prices; this strategy is commonly used when there seem to be an increased level of competition in the industry; to drive down competition, the giants cut their prices. The availability of economies of scale allows the giants to make profits while selling at a lower price. The unavailability of economies of scale makes it less profitable or losses are made by the upcoming investors and thus are driven out of the market.

Oligopolistic Competition in Australia3Table of ContentsSummary..............................................................................................................................2Introduction..........................................................................................................................4Ethical Theories...................................................................................................................4Characteristics of the Oligopolistic Market Structure.........................................................6The Roles of the ACCC.......................................................................................................6Recommendation.................................................................................................................6Conclusion...........................................................................................................................7References............................................................................................................................8

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