Economics Assignment: Market Power and ACCC in Australian Banks

This economics assignment analyzes the structure of the Australian banking sector, which is characterized by an oligopoly dominated by four major banks. The report examines the economic issues arising from this market power, including concerns raised by the ACCC (Australian Competition and Consumer Commission) regarding high interest rates, lack of competition, and potential misconduct. It explores issues such as cartel formation, price fixing, and the impact on consumers, including the consequences of high mortgage prices and fraudulent lending practices. The assignment also details the actions undertaken by the ACCC to address these problems, such as investigations, regulatory solutions, and guidelines for fair trade practices. Recommendations are provided to resolve the issues and promote a more competitive and consumer-friendly banking environment in Australia. The report also highlights the negative effects of cartel formation such as higher prices, lack of transparency, misuse of power, and control of output. It further investigates the impact of high interest rates on the economy and the actions taken by ACCC to improve competition and consumer protection. Finally, the report provides recommendations for government intervention to mitigate the negative impacts of the oligopoly and promote a more competitive banking environment.