This report provides an in-depth analysis of the Australian banking sector, examining its structure and comparing it to an oligopolistic market. The report highlights the dominance of the 'big four' banks (Commonwealth Bank of Australia, Westpac Banking Corporation, Australia and New Zealand Banking Group, and National Australia Bank) and discusses the implications of this market concentration, including potential inefficiencies and the loss of consumer welfare. The report explores the characteristics of an oligopolistic market and how they apply to the Australian financial sector, including barriers to entry, advertising costs, and price-setting behavior. It also addresses the concept of a collusive oligopoly and the inefficiencies that arise from it. Finally, it examines potential government actions to address the issues created by this market structure, such as increasing competition to overcome the problems associated with the oligopoly.
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