Advantages Of Oligopolistic Market For Consumers Economics Essay

Published: 2021-06-30 01:05:04
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The original supermarket was set up in Rochdale, Lancashire in the 1840s. It was established by groups of retail merchants. Gradually, the supermarkets grow up rapidly. In twentieth century, supermarket has been developed a store which selling different sorts of nutrient merchandises. After the Second World War, supermarket developed continually, this has a sell-service format. At that clip, Tesco, Sainsbury ‘s, Asda and Morrisons had opened at that place ain shops ( Tescopoly, n vitamin D ) . Harmonizing to The Guardian ( 2010 ) , the supermarket industry in UK, was dominated by four chief companies with approximately 72.5 % of the market portion: Tesco has 27.1 % , Asda has 16.9 % , Sainsbury ‘s has 16.1 % and Morrisons has 12.4 % of market. Anderton ( 2008 ) states that one market has a few houses compete with each other, and the houses are mutualist, that is oligopoly. The major facets of its market construction are that the industry must be controlled by a little figure of houses ; the chief houses are mutualist ; the market has barriers to forestall new houses to entry. In this instance, the supermarket industry in UK was dominated by four manufacturers ; and they are mutualist, therefore it fits the feature of oligopoly market. The treatment is about advantages and disadvantages of oligopolistic market for consumers. It will be discussed with the characteristics of the oligopoly. The advantages include non-price competition, monetary value stableness and the market mix. And the disadvantage is collusion.
There are several advantages of oligopolistic market for consumers. First of wholly, harmonizing to Anderton ( 2008 ) , one of the feature of oligopoly is non-price competition. Firms in order to vie the market portion in this extremely competitory oligopolistic industry. They may utilize monetary value competition and non-price competition. Price competition can utilize dismissing the monetary value of productions to increase the market portion. However, monetary value war is a hazardous scheme, which may lose the market portion and inadequacy in oligopolistic market. Anderton ( 2008 ) suggests that, in oligopoly, non-price is ‘a less hazardous scheme than monetary value competition. ‘ ( Anderton, 2008:330 ) . It includes advertisement run and Branding. All of these are benefit for consumers, for case, Tutor2u ( 2010 ) lists a twosome of stairss of non-price competition including Home bringing systems, 24 hr opening the shop, shopping online, set up the station office or child-care Centre, engineering invention including self-scanning machines and banking services including insurance. Furthermore, because of the feature of the imperfect competition, oligopoly selling many different branded goods for consumers, hence, people may hold many picks and the public assistance is increased. It is benefit for the consumers ( Anderton, 2008 ) . Another illustration is that houses offer the nine card to pull consumers. Guardian ( 2010 ) states Tesco sent out about ?100m nine card to clients, it encourages people to make more shopping in their markets. Tesco usage this publicity to profit the consumers, so that they earn more market portion. In these instances, they represent that non-price competition is normally in oligopolistic market, and it is good for clients.
Another advantage for consumers is that the monetary value in oligopoly is stable. Harmonizing to Anderton ( 2008 ) , altering the monetary value has possible hazards, whatever the house lowers the monetary value or lift the monetary value, they all could lost market portion, such as the monetary value war. Even though house lower their monetary value may spread out the demand as clients buy more of their merchandises, this scheme is non lasting, at the terminal, they still lost the market portion. Therefore, to maintain the monetary value unchanged is a rational scheme for houses in an oligopolistic market. The state of affairs of the monetary value is shown in the kinked demand curve ( which can be seen the undermentioned figure ) . Anderton ( 2008 ) shows that the kinked demand curve is when one house lowers the monetary value, another will follow. If one house raises the monetary value, so the monetary value will non alter. That is the kinked demand. In short, monetary value stableness is benefit for the consumers, because to maintain the monetary value stalls, so consumers no demand to alter their budgets normally. It is convenient to consumers and no concern about the monetary value. In add-on, although the monetary value war is non good for the rivals, it has advantage for consumers. Peoples would prefer to see the monetary value war, because they can purchase the merchandises with a lower monetary value.
Figure: The kinked demand curve
Beginning: Tutor2u ( 2010 )
Apart from the advantages for consumers, there is a disadvantage exist either. It is conspiring with other mutualist houses in oligopolistic market. Anderton ( 2008 ) states the major houses may fall in together to go a Cartel, it seems to go a monopoly to command the market, as they may do understanding together to gain a maximize net income. In this state of affairs, consumers must go the sick person, because the houses would take a high monetary value scheme and the monetary value is unjust to people.
To sum up, the advantages and disadvantage of oligopoly market for consumers have been discussed. With the researching of the supermarket industry in UK, it fits the feature of oligopoly. The market construction of oligopoly including non-price competition, monetary value stableness and the publicity are benefit for consumers. And the collusion in oligopoly is bad for consumers. The oligopoly in this industry brings several advantages to consumers, such as stabling the monetary value, derive the benefits under the non-price competition including mass publicity, engineering invention and good services. However, there are besides some harmful effectual to consumers in oligopoly. In oligopoly, it is easy to go collusion that go againsting the benefits of the consumers. However, it seems that the market construction of the oligopoly is more to the benefit of consumers in the supermarket industry in UK.
Mention Section
Anderton, A. ( 2008 ) .Economics ( 5th Edition ) Harlow: Pearson Education
Guardian ( 2010 ) [ Online ] i??Morrisons clear to purchase Safeway.
Available at: hypertext transfer protocol: //www.guardian.co.uk/business/2003/sep/27/supermarkets.uknews
( Accessed 10th February 2010 )
Guardian ( 2010 ) [ Online ] i??Tesco enjoys best Yule in three old ages.
Available at:
hypertext transfer protocol: //www.guardian.co.uk/business/2010/jan/12/tesco-christmas-sales-figures
( Accessed 10th February 2010 )
Tescopoly ( n vitamin D ) [ Online ] , Supermarkets History.
Available at:
hypertext transfer protocol: //www.tescopoly.org/index.php? option=com_content & A ; task=view & A ; id=657 & A ; Itemid=158
( Accessed 10th February 2010 )
Tutor2u ( 2010 ) [ Online ] , Oligopoly.
Available at:
hypertext transfer protocol: //tutor2u.net/economics/content/topics/monopoly/oligopoly_notes.htm
( Accessed 10th February 2010 )
Tutor2u ( 2010 ) [ Online ] , Kinked demand curve under oligopoly.
Available at:
hypertext transfer protocol: //tutor2u.net/economics/content/topics/monopoly/kinked_demand.htm
( Accessed 10th February 2010 )

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