Monopolistic Competition, Oligopoly, and Affordable Housing Analysis

This economics essay provides an overview of monopolistic competition and oligopoly market structures, highlighting the key differences in terms of the number of sellers, product differentiation, and market control. It uses examples like soap brands and 5-star hotels to illustrate these concepts. The essay also discusses the role of supply and demand in determining market equilibrium and the impact of government policies such as subsidies on market outcomes. Furthermore, the essay delves into the topic of affordable housing, emphasizing its importance for the livelihood of people and the role of government in ensuring access to affordable housing options, especially for low-income groups, to improve the standard of living and productivity.

Economics
Economics
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Contents
Monopolistic Competition and Oligopoly Market............................................................................................... 3
Affordable Housing......................................................................................................................................................... 6
References........................................................................................................................................................................ 11
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Monopolistic Competition and Oligopoly Market
Monopolistic completion refers to a situation when there are large number of buyers and sellers
but the products being bought and sold can be differentiated amongst each other on the basis of
the quality, size and other characteristics which enable the firms to charge differentiated prices
for the products being so bought and sold (Cucchiella,F.and D’Adamo, I., 2015). The fact that the
products are different from each other makes the producers and sellers charge different price
for the products and that they are being able to have a command in the market. The firms
compete between themselves on the basis of the price of the goods and the different product
characteristics being offered for sale. It is relatively the most common form of market which is
seen in recent times and that the firms do have a large amount of goods with different varieties
to offer. Almost all the goods and services which we use in our day to day lives are being
operated under a monopolistic competitive market (Chamberlain,N.and Kuhn,J., 2015).. The
reason why the term monopolistic and competitive both is used is because, different firms
compete in the same market for similar products. However the products are similar, but they
are not identical and hence they tend to create monopoly for their products over a period of
time, thereby making them monopolistic competitive in nature. We can take the example of
soap, shampoo and any other product of our day to day live which we use and each one of them
would relate to this itself (Davey, H., 2011). We are having atleast 10 different types of soap in
the market. Although each of the soap is similar in the function, in the sense that they perform
identical functions, yet each of them are different from one another in the sense that they have
different product features and different product characteristics. Hence the products of different
brands have their own uniqueness and that they command their own unique value in the
market. The products being offered for sale are made in such a unique manner that they have a
different market for their own, even when they are having a similar kind of quality and features.
Oligopoly market is a kind of market in which there are few sellers who ideally control the
entire market form and that they are structured in such a manner that they perform the
functions of the market so as to regulate the overall demand in their channel (Beal,E.,
Wickersham,E.andKienast,P.,2012). The market is so designed that the firms operate and they
are having effective control over the entire demand of the market. The products are different
from each other in the quality and characteristics. However the basic nature of the product
remains the same. The basic differentiator between the monopolistic competitive market and
the oligopoly market is that the product is such in the case of oligopoly that there are few
number of sellers in the market. This happens when there are restrictions to free entry or that
the nature of the product is such that the free entry itself becomes difficult. As a result of such
dominance of few players in the market the price being charged and the terms of sale being
offered generally is solely determined by the sellers and that there remains some degree of
dominance in the market (Opocher,Arrigo;Steedman,Ian,2009). The markets soon tend to
become skewed towards the sellers and the customers are not able to have effective control
over the market. One such example is a market of 5 star hotels. The market for 5 star hotels is
such that there are only few large players operating globally who control the overall market.
This is because the product is such that the more and more players cannot enter the market on a
daily basis. Each of the brands provides different kind of services and they have a unique way of
delighting the guests (Bangs, J.,201). However it is very difficult for any new brand to enter the
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market and make space for themselves because of the very high investment and very high
technical skills required to open a 5 star hotel and to deliver the kind of service and the quality
which it commands (Bienefeld, M.,2009). Hence it becomes difficult for the new players to enter
the market. Effectively even though there is similar service which is of accommodation and food
and beverage, there are very few firms operating in the market owing to the cost of luxury
which is to be provided to the guests and these few firms are able to charge the price which they
decide that it should be charged to the customers. As a result the market becomes highly in
favour of those players and that they are in a position to influence the market tin the way they
desire to do so. The market forms are destined to be proper and that they must operate in the
best possible manner so that the firms are operating effectively (Bangs, J.,201). There are large
number of demerits which follow from such a kind of completion in the market, the principal of
them being that the market structure is not very fair and that the firms may not be conducting
their business in the fair manner as they are supposed to conduct.
The request and supply is a vital financial marker, and the same has a significant level of effect
in the general economy (Dewey,A.,2008). In determination of the financial ideas there is a
necessity of the investigation of the request and supply and different monetary issues discover
their determination through this component.
With the presentation of new general stores in Australia under ceteris paribus condition, there
would be an expansion in supply coming about into a fall in costs of the ware. With the
adjustment in wage variances there would a move sought after bend, which would prompt an
adjustment in the balance, as in a similar amount would now be sold at higher cost.
With an adjustment in populace slant there would be an adjustment in the general request bend,
and that would again prompt a move popular bend. Presently accepting that the pattern
changes against the item, at that point the accompanying would be the circumstance for the
item (Opocher, Arrigo; Steedman, Ian,2009).
With an adjustment in the purchaser desires and the tastes of the customer and publicizing by
the provider, there would be an adjustment in the request bend, as in the same would move
either upwards or downwards. Under both the conditions there would be an effect on the
balance.
Affordable Housing
The piece of government is to suit the typical defend, portray and guarantee property rights,
and maintain legally binding approaches. All through the twentieth and mid 21st century,
government has extended its part in money related life (Anderton, Alain., 2006). The piece of
government has stretched out to address gathered business frustrations and externalities by
developing their authoritative degree to address common concerns, monopolistic competition
and give open stock. Governments have similarly familiar diverse social undertakings with give
a social prosperity net to low-wage individuals and senior subjects.
Blessings address portions to creators by the organization which diminish their variable costs of
age and urges them to expand their yield.
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The effect of enrichment with a sliding slanting premium twist is to assemble the measure of
stock sold and to diminish the business adjust cost (ROY, S., 2011). This is shown in the diagram
underneath
Government appointments are every now and again offered to creators of authenticity stock
and organizations and business wanders obliging some security from ease widespread
competition.
If the blessing is a guaranteed portion to producers, the lawmaking body will pay the
sponsorship each unit to the creator over the new market cost. The gift lessens amicability cost
from P2 to P1. Buyers get from consuming more at a lower cost. Producers will get esteem P1 +
the enrichment (P1P3) (Bienefeld, M., 2009). The total spent by the assembly on the assignment
will be Q1 x (P1P3). This is exhibited in the diagram underneath.
Blessings may in like manner invigorate went before with inefficiency among producers when
the task of free market forces may achieve a more capable assignment of benefits. There are in
like manner extensive stresses that liberal agrarian allocations are provoking whole deal
biological issues as agriculturists place assets into genuine developing techniques that
undermine the supportability of our regular resources.
Affordable housing is basically one of the most important requirements which has to be
competed and provided by everyone. The scheme for affordable housing has been widespread
in the recent year and this has gained a lot of importance. The reason for such high requirement
for the affordable housing is that day to day housing is becoming very costly and that people are
not able to afford the basic housing cost (Anderton, Alain., 2006). Also housing is one of the
prerequisites for livelihood of people. Hence it is important for one to achieve a system whereby
affordable housing can be offered and that they are able to implement the same in all the best
possible manner. The government across the globe is taking initiatives in ensuring that the
people are afforded with the lowest housing costs and that they are able to provide people with
some low cost affordable housing and accommodation measures. The idea behind providing the
people with such low cost accommodations is that over the years, people are unable to afford
the high cost of living in the cities and the places of their work and they tend to stay at a place
where they do not work. This increases their time of travelling and commuting which eventually
leads to loss of productivity and thereby overall loss of the productive capacity of the nation.
More than that it has also been seen that the housing being the primary requirement of the
people, if the same is not provided to the people in the manner in which they desire, it may tend
to have dismal impact on the standard of living of the people (White, Graham, 2001). As such it
is always advisable to ensure that people are afforded with a good standard of living and that
they ensure highest degree of relevance and prominence in the market. More and more projects
are now being developed in such a manner that they have to afford some houses for the low
income group people of the society and not all of them are available to be sold to the elite class
of customers. Some of the flats or indeed some portion of the flats are earmarked for some
sections of the people which is basically the needed and low income earner group and they have
to allow the homes to be given to those class of people.
At times it becomes important for the governments and the regulatory bodies to ensure that
they provide a proper standard of living to the people. However the people are not always able
to afford proper housing facilities in which all the basic necessities can be accommodated with.
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Hence in those situations the government had to step in to ensure that the people are being
provided with such basic necessities at reasonable cost so that there is fair chance to all to live a
decent standard of living (ROY, S., 2011). In the absence of proper opportunity to people it
becomes difficult at times for others to have a proper living and that in cases may result into
poor form of living. Hence the scheme of affordable housing is brought into place which ensures
that everyone has a right to stay at good homes and that they are provided with the basic
necessities and requirements as and which is desired by the people. In the absence of such
schemes it may be so possible that they are unable to afford a proper living and that they are
unable to maintain the standard of living which they must maintain and this might lead to
improper situation.
Lodging reasonableness can be estimated by the changing connections between house costs and
leases, and between house costs and wages. There has been an expansion among approach
producers in reasonable lodging as the cost of lodging has expanded drastically making an
emergency in moderate lodging.
Since 2000 the "world encountered an extraordinary house value blast regarding greatness and
length, yet in addition of synchronization crosswise over nations." "At no other time had house
costs risen so quick, for so long, in such a significant number of countries."[18] Prices multiplied
in numerous nations and almost tripled in Ireland (Sloman,J.andSutcliffe, M., 2003).
The government and the regulating agencies have ensured this through a mechanism whereby
they impose the liability of ensuring affordable housing on the builders of the residential
project. Under this proposal the government has prescribed that a certain percentage of the
total area built and developed must be sold at a price which is much below the average price at
which the rest of the area is being sold. The price at which these flats are sold may be lower than
the cost of construction along with the land cost for those flats. The reason for selling the flat at
such low cost is that the flats must be made available to the lower section of the people as well
and only on the ground that the flats are not affordable to them the same be denied to them is
not a tenable logic and therefore the same is not to be followed with. This has been prescribed
in strict law and order and therefore some portion of the flats being constructed are now being
left to the disposal of the low sections of the people and some to the middle income earners and
the rest are being sold to the other players in the market (Opocher,Arrigo;Steedman,Ian, 2009).
As a result of such dominance in the market the overall market structure improves and that the
firm is able to realise the revenue which it expects to earn from the flats by ensuring that the
high income earning flats are sold at even higher amount such that to cover up the loss incurred
in selling some of the flats at low income level and to the middle income level earning section of
the society. As a result the overall situation in the organisation has improved and that the firm is
able to develop itself in much higher manner than the same would have been possible
alternatively. The ideology is that to ensure that there is highest development of the overall
social wellbeing of the people and that no one should be deprived of the basic living which they
deserve.
Growing population and the limited availability of land is putting more and more pressure on
the land resources of the world thereby making the price of the land increase all the more
(Krugman,P.andWells,R., 2006). This has lead to a very high increase in the price of the flats
which the people can live in and thereby the price of the homes are increasing many folds than
what it is ought to be. It is therefore inevitable to take care of those people who are not able to
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survive themselves and afford themselves a proper house in which they can live in. The
regulatory authorities are therefore now required to be more cautious and active towards
allocation of land such that the same is considerate in allocation of the same to the poor sections
of the people who do not have enough wealth to afford such a high standard of living so as to
buy themselves such costly houses to survive (Hicks, J. and Hutt, W.,2011). The reason for such
need has lead to the development of a need for affordable housing in the economy which has
therefore resulted into development a proper scheme whereby all the developers will have to
provide the homes in a proper form so that the interest of each and every consumer is achieved
and that none of them is harassed (Sloman,J.andSutcliffe, M.,2003). The overall lifestyle of the
people is improved. However care must be taken to ensure that the people who do not form part
of the affordable housing scheme must not take advantage of the same and that they should be
asked to pay the full price for the home. This is to ensure that the benefit of the scheme is
available to only those who actually use those homes for their day to day living and that the
scheme is not available to any person who uses the homes for their livelihood.
In estimating reasonableness of lodging there are different uses past the cost of the real lodging
stock itself that are considered relying upon the file being utilized.
A few associations and organizations consider the cost of acquiring a solitary family home;
others take a gander at the cost of leasing a condo.
Numerous U.S. ponders, for instance, center fundamentally around the middle cost of leasing a
two-room loft in a substantial condo complex for another inhabitant. These investigations
frequently protuberance together extravagance condos and ghettos, and in addition attractive
and unwanted neighbourhoods (White, Graham,2001). While this training is known to mutilate
the genuine costs, it is hard to give exact data to the wide assortment of circumstances without
the report being cumbersome.
Regularly, just lawful, allowed, isolate lodging is considered while ascertaining the cost of
lodging. The low lease costs for a room in a solitary family home, or an illicit carport
transformation, or a school quarters are for the most part avoided from the figuring, regardless
of what number of individuals in a region live in such circumstances. As a result of this
investigation philosophy, middle lodging costs have a tendency to be marginally swelled.
Expenses are for the most part considered on a money (not accumulation) premise. Hence a
man making the keep going installment on a huge home loan may live in formally unreasonably
expensive lodging one month, and exceptionally reasonable lodging the next month, when the
home loan is paid off. This contortion can be critical in territories where land costs are high,
regardless of whether salaries are comparatively high, in light of the fact that a high pay permits
a higher extent of the salary to be committed towards purchasing a costly home without
jeopardizing the family unit's capacity to purchase nourishment or other fundamental
necessities (Kienast, P.,2012).
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