logo

Oligopoly Competition in the Australian Market

   

Added on  2021-06-17

5 Pages1362 Words477 Views
Running Head: Oligopoly MarketsOligopoly Competition in the Australian MarketBy (Name)(Tutor)(University)(Date)

Oligopoly Markets2Oligopoly Competition in the Australian MarketIntroductionOligopoly competition is a situation where the players serving a market are fewer, but some of the largest players dominate the market. The newspaper article “Australia isn’t dominated by big businesses that gouge customers: Grattanreport” written in December 2017 byMinifies, Chisholm and Percival, tells us of the existence of oligopoly competition in the Australian market. This type of competition has raised issues in the market and therefore has been considered not effective for the markets. This paper clearly notes that this type of competition has fallen over the years. However, despite falling in some industries, it has gone up in others like the banking industry. This analysis will try to see some of the reasons why the policy makers discourage this type of competition. The analysis will be useful to all the industries falling under oligopoly competition as it will help them in understanding what is right and what practices to avoid. The paper shall also be used by the policy makers in implementation of their rules and regulation because it will highlight the most important factors that make this type of competition undesirable. Ensuring that there is good competition in the market is an important role for the government.Economic AnalysisWithout competition, the market players have power both on quantity and price. This means that they can raise or lower prices whenever they deem necessary. The article clearly notes that sometimes there is spike on fuel prices and that health insurance premiums rise rapidlyevery year (Minifie, Chisholm and Percival, 2017). This is a good example of misuses of the market power that these firms possess. The article has a notion that the concentration of oligopoly firms in Australia has reduced to 15%. This means that many firms have been established and joined the market. The worst characteristic of oligopoly markets is that they havebarriers to entry. This is what keeps the firm dominating the market, in an economy with less regulation of this type of competition, new firms are discouraged from entering the market by thelarge firms. They are able to do this because they have power over prices; when faced by an entrance situation, they lower their prices to lower levels such that the entrants fail to continue operating at a loss. This is because they have high economies of scale compared to the new entrants.

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
HI5003 Economics for Business | Australian Market Structures
|6
|1435
|75

Australian Market Structures Assignment
|6
|1441
|54

The Difference Between Monopoly vs. Oligopoly
|9
|1550
|60

Monopoly Market Structure: Australian Postal Services and Banking Sector
|13
|3027
|274

Effects of Oligopoly and Collusion in Australian Banking Industry
|10
|1404
|234

Economics Assignment: Oligopoly
|7
|742
|89