This essay will examine and discuss the key issues that arise in the article by ‘The Sydney Morning Herald’. This essay will discuss the article in context with economic topics of monopoly, competition and efficiency. The article discusses various factors which affect and have an impact on independent retailers in the market. A call for the government to intervene in the matter has been made, due to big companies such as ‘Woolworths and Coles’ having an upper hand on market power as it will ‘engage in conduct that will effect substantially on lessening competition’ (The Sydney Morning Herald, 2015). The government needs to regulate anti-competitive behaviour and market monopoly in order to maintain a level of competition within the market, …show more content…
According to Hubbard et al. (2012 pp. 212), monopoly is ‘a market structure in which there is only one seller of a good or service that does not have a close substitute’. In addition to that, Coles argues that bringing in smaller firms and competition will eventually lead to prices rising, whereas The Masters Grocers Australia and Liquor Retailer Australia (MGA/LRA) want the government to step in and implement laws which will prevent independent firms from anti-competitive behaviour and implement a perfectly competitive market for small business. Another argument that is raised in the article is that by ‘taking away independent retailers ability to trade on days when their larger competitors are closed will ultimately have a detrimental effect on their survival’ (The Sydney Morning Herald, 2015). In this case this would lead to a ‘shutdown point’ (Hubbard et al, 2012 pp. 192) for smaller businesses, as there will be no competition in the market which means smaller and independent businesses shutting down due to inefficient level of output in the
This essay will examine key aspects of the recent implementation of the Australian Consumer Law (ACL) 2011, which is the largest overhaul in Consumer Law in Australia in the past twenty five years. The ACL replaces 20 existing State and Territory laws into one national law , the legislation was enacted in two main parts as Schedule 2 of the renamed Trade Practices Act 1974 (Cth) (TPA) - Competition and Consumer Act 2010 (Cth) (CCA) . Aforementioned this essay it will outline the key benefits of the implementation of the act. Furthermore it will critique the Act, whilst exploring the objectives of the legislation.
The article then goes on to explain the economic climate that changed the competitive environment from one of near-perfect competition to the oligopoly that existed in the 1980's. This was followed by several examples of how local legislation, and environmental factors kept many of the smaller independent stores and chains in business and clawing for market share.
There is much controversy about what a ‘good’ monopoly is and what a ‘bad’ monopoly is. Monopolies can have a positive impact on the market. One example is the history of telecommunications. The American Telephone and Telegraph “consolidate(d) the industry by buying up all the small operators and creating a single network—a natural monopoly” (Taplin). It became easier and more convenient for consumers to communicate. This is an example of a ‘good’ monopoly. Louis Brandeis, counselor of President Woodrow Wilson, agreed. He said it makes sense for one or a few companies to own‘“natural” monopolies, like telephone, water and power companies and railroads” (Taplin). The keyword here: natural monopolies. Natural monopolies are different from most of the monopolies in the market place today. A natural monopoly “refers to the cost structure of a firm” (lpx-group). A monopoly is “associated with market power and market share in particular” (lpx-group). Natural monopolies make
Monopoly, means that a firm is sole seller of a product without any close substitutes, controls over the prices the firms charge. Government sometime grants a monopoly because doing so is viewed not only to be in the public interest, but also to encourage it with price incentives. However, monopolies fail to meet their resource allocation efficiently, producing less than the socially desirable quantities of output and charging prices above marginal cost. Thus, this inefficiency of monopoly causes the quantity sold to fall short of social needs. In order to handle the problems, policymakers in the government regulate the behavior of monopolies and try to make monopolized industries more competitive
A monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it. A monopoly sells a good for which there is no close substitute. The absence of substitutes makes the demand for the good relatively inelastic thereby enabling monopolies to extract positive profits. It is this monopolizing of drug and process patents that has consumer advocates up in arms. The granting of exclusive rights to pharmacuetical companies over clinical a...
Exploring the profitability of this industry, domestically retailers are struggling to maintain high profit margins. The solid industry growth expected for the coming years is highly supported by the economic turnaround in 2011, however many small retailers are feeling the pressure of low-cost imports . Reduced imports and the continued shifting of manufacturing operations to low-cost countries, creates a trickle down effect onto the fragmented market of companies, with a mix of small and large participants (see Exhibit 2). Increases in price-setting control of wholesalers, are causing downst...
With an understanding of the theoretical links between economic structures, relations of production, and political systems that protect economic structures in society this case study examines media as a contributor to democracy in Australia as well as a business with economic objectives. This section will provide a short explanation of Fairfax media history and position in 2012 prior to explaining Gina Rinehart’s role in the company. The print sector in Australia has historically exhibited relatively high levels of concentration, dominated by News Corp Australia, Fairfax and APN. The Australian print news media have experienced a long-term trend of a decrease in titles and owners. According to Geoffrey Craig, ‘in 1923 there were as many as
This article, America’s Monopoly Problem, was composed by Derek Thompson and published on the Atlantic Newsletter: For much of the 20th century, small businesses thrived and there was a steady control over big businesses, but in the more recent years, our economy is seeing more large, monopolistic firms popping up in all types of industries. Political power also comes into play under the issue of monopolies.
As one commentator has explained, the Robinson-Patman Act “was designed to protect small businesses from larger, more efficient businesses. A necessary result is higher consumer prices.” Moreover, the Act ironically appears increasingly to be ineffective even in protecting small businesses. Over time, many businesses have found ways to comply with the Act by, for example, differentiating products, so they can sell somewhat different products to different purchasers at different prices. Such methods are likely to increase the seller’s costs—and thus increase costs to consumers—but do nothing to protect small businesses. The Act generally appears to have failed in achieving its main
The retail giant’s policies to offer lowest prices on the market is one that gives the company an upper hand since it can leverage on its massive economies of scale, but ultimately the low prices throw the local economy into turmoil. The many small businesses within the regions find it extremely difficult to compete with the low prices offered by the retail giant, Wal-Mart. According to Wolff-Mann (2016), the opening of Wal-Mart in North Carolina resulted in a 30% drop in the sales of a 44-year-old grocery store. Whenever the grocery store cut prices to retain its clients which were being lost to Wal-Mart, the giant retailer would always undercut or match the price. This unfair practice led to the close down of the store, while other businesses in the region succumbed to the stiff and unfair competition. Therefore, when Wal-Mart moves into a small town, things do not get better; the company introduces unsustainable economic models which makes thing worse within the
Monopolies are when there is only one provider of a specific good, which has no alternatives. Monopolies can be either natural or artificial. Some of the natural monopolies a town will see are business such as utilities or for cities like Clarksville with only one, hospitals. With only one hospital and there not being another one for a two hour drive, Clarksville’s hospital has a monopoly on emergency care, because there is not another option for this type of service in the area. Artificial monopolies are created using a variety of means from allowing others to enter the market. Artificial monopolies are generally rare or absent because of anti-trust laws that were designed to prevent this in legitimate businesses. However, while these two are the ends of the spectrum, the majority of businesses wil...
Well the bottom line is that a monopoly is firm that sells almost all the goods or services in a select market. Therefore, without regulations, a company would be able to manipulate the price of their products, because of a lack of competition (Principle of Microeconomics, 2016). Furthermore, if a single company controls the entire market, then there are numerous barriers to entry that discourage competition from entering into it. To truly understand the hold a monopoly firm has on the market; compare the demand curves between a Perfect Competitor and Monopolist firm in Figure
The food and staples retailing is an increasingly competitive industry. The market giants (competitors) are Coles (owned by Wesfarmers) which has 741 stores across Australia and plans to add 70 m...
Examples of such goods are public utilities and professional sports leagues. The characteristics of monopoly are 1) a single seller where the firm and industry are synonymous, 2) a unique product for which there are no close substitutes available in the market, 3) the firm is price maker where the firm has considerable control over the price because it can control the quantity supplied, and 4) the free entry and exit of firms is hindered as there are no competitors in the market. This model again lacks practical implications for Reckitt Benckiser PLC because the company is not running its operations in a market where they are the sole providers of the goods and products rather the company is having competitors who produce goods and products in a similar fashion as produced by Reckitt Benckiser
The nature of the business of retailing puts retailers at a assumed risk of incurring costs because products are bought with the assumption that consumers will purchase. Additionally there are external factors that may also pose risks such as natural disasters, theft, spoilage and fire. In other circumstances retailers also extends financial credit to customers in the form of credit sales which facilitates the smooth transition from retailers to the marketplace. Retailers are in constant contact with customers which gives them the opportunity to research and study buyer’s behaviour. This involves collecting information about changes in customer preferences, perception and shifts in the demand curve. Through advertising within their stores retailers are able to exhibit and introduce existing and new products to the marketplace. Ultimately retailers are in the business of selling products to customers to achieve their goals of generating