Economics Essay Example: Market Structures in Australia

The Australian market has a diverse economy ranging from different industries, market structures, and public companies. An important determinant to an active national economy is the market structure which includes monopoly, oligopoly, and monopolistic competition. All these structures are unique, and they can be categorized according to the degree of competition, pricing strategies and profits to the firm. The market structure indicates all the vital aspect of the business sector including the number of firms and customers, the product type and influence on the market. A more influential firm is considered to be more competitive. This essay will focus on three marketing structures in Australia such as Monopoly, Monopolistic competition and Oligopoly. Organizations can shift from one structure to a different one amid the time of operation. This can be a result of product changes or competition introduction.

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Oligopoly is a marketing structure defined by a couple of firms delivering almost all the yields. The competitors number is a distinguishing feature of the market structure. It is the commonest in Australia. The firms are always few because of the entry barriers which are financial resources that are required for entry and governmental regulations. Some of the companies where oligopoly is evident in Australia include Coca-Cola, Carlton United, Hoyts, and Bridgestone. In this market structure, the degree of product differentiation is high, and this makes the competition be of sale and not of price. Advertising is the main feature of this structure. An effective promoting effort gets the general population eye and draws in purchasers to the firm being referred to over the individuals who don't publicize (at any rate as effectively). The main advantage is that the organizations that are involved have high-value setting capacities.

The majority of the sectors practicing oligopolies such as network services and metals have had a tendency to be similarly little traded and essentially utilized as local intermediate inputs. This implies that, while estimating prices by oligopolies has unassuming direct impacts on the final product, it has exceptionally significant indirect effects that expand on each other economically. When it comes to supplying, each firm supply products that are differentiated. They interact on the prices and possess a fixed cost. The Kinked Demand Curve, an economic graph, indicates why in oligopoly a common price has been adopted to obtain a larger output.

Monopoly happens when an organization produces items for which they cannot be substituted Because of the way that the organization has no competitors, there is total control over the conveyance of these items and, as a solitary merchant can make barriers for potential contenders. Monopolies are usually alluded to as price setters, which implies that as a result of their position in the business sector, they can set any cost for goods or services and the demand will still be high. This is primarily because nobody else is offering it. Today In Australia, there are not very many imposing business models, yet regardless they exist. The main bodies that have monopoly enforced by their laws are the Australian Post, Australian airlines, Australian Telecommunication Commission and the water company. They are all owned fully by the government, and they have exclusive trading power which has been a subject of public debate.

For a sound marketplace to exist and therefore improve the economy, restrictions have been placed by the government. The principle purpose behind this is the way that monopolistic firms have outright control over the pricing of products. Without government intercession, they could charge any cost for their items and buyers would be compelled to buy the item because of the absence of rivalry. An impeccable case of a government limitation on monopolistic conduct is to put a price ceiling on an item. This implies that, if the organization offers its item for a sum more prominent than the cited price ceiling, the firm is infringing upon the law.

The monopolistic competition comprises of countless little firms contending with each other in selling a similar item regarding pricing, quality, and marketing of the product. These organizations have the freedom to enter or leave the industry. The degree and productivity of this structure operation are accomplished by the possibility that all the make differentiated items. For instance, in the media market, some individuals produce magazines while others concentrate mostly on broadcasting their news. They emphatically trust that creating differentiated items and promoting them gives a solid premise to their deal to the customers and improving the quality of production. Another incredible force in this structure is the idea of brand loyalty. The buyer chooses the brand that they incline toward or the most appealing, and they purchase it.

The best case of monopolistic competition is Coke and Pepsi. Both organizations discharge a comparable drink, both have their minor nuances and publicizing, and brand loyalty has gigantic influence in their general benefit and utilization. Regarding monopolistic competition, the consumers encounter price discrimination since every firm is allowed to set its cost. Free entry of new organizations into the business sector permits the customers to appreciate a wide assortment of items. Product differentiation enables customers to identify their product with ease. Additionally, the competitive nature of the market structure assures customers of high-quality products.

In conclusion, the essential standard in market structure is the consumers. Each of the three market structures has their upsides and downsides, however, in the long run, the customer picks what to purchase from where. However, consumers in the monopolistic competition market appreciate increasingly, and their points of interest exceed their burdens. The government has a role in monitoring and changing any market conduct that is potentially harmful to the marketplace, the consumer, and the economy.

References

Katz, M. (1984). Price Discrimination and Monopolistic Competition. Econometrica, 52(6), 1453. http://dx.doi.org/10.2307/1913515

Mountain, B. (2014). Independent regulation of government-owned monopolies: An oxymoron? The case of electricity distribution in Australia. Utilities Policy, 31, 188-196. http://dx.doi.org/10.1016/j.jup.2014.09.011Tyers, R. (2015). Service Oligopolies and Australia's Economy-Wide Performance*. Australian Economic Review, 48(4), 333-356. http://dx.doi.org/10.1111/1467-8462.12126