Posted at 08.10.2018
Oligopoly is significant phenomena in this commercialized population. With its merits it dawns on the general public and evitable disadvantages, oligopoly has aroused controversial debates lately. The British isles supermarket industry is an example of it. The oligopoly market has some characteristics. Also, the kinked demanded is important theory in oligopoly market. Which survey is aiming at talking about the good and negative factors of oligopoly for consumers with a record of the English market.
Definition of oligopoly is can be slightly different in various situations. When discussing the British isles market, it is identifies few competitive organizations' interdependency with one another in an industry given by Anderton (2008) looks more favorable. This means that that the United kingdom supermarket industry is oligopoly market since it shows high interdependency within several strong companies. (Anderton. A, 2008) There are several characteristics of oligopoly can be viewed under this competitive circumstance, which contribute to its unique position in the economic area. As Gillespie. A(2008) says " Firstly, an oligopoly market should contain several strong companies, who enjoy a huge share of the market; this is actually the very difference lays between oligopoly and monopolization, which is solitary producer within an industry. Secondly, the probability for other less-competitive companies to take a standing point on the market is faint; it is not difficult to imagine that with the competitions of the big companies, other outsiders are difficulty to talk about market. Finally, within the union, these big businesses are highly interdependent; for example, decisions made by any member are unavoidably cause huge effects on the whole union. Furthermore, the MBALib (2010) reported that Kinked Demand refers to the circumstances that if one company increases the price, other company would still keep the price stability. The consumer will other company's products; hence, to the company which increases the price, the demand curve could collapse; on the contrary, if one company reduces the purchase price, others would decrease the price for steering clear of losing the ratio of the market; because of this, the demand is inelasticity. Furthermore, the Price Battle would cause for the corporations land their price. This would cause high risk problem. If the purchase price war happened, the company could lose large money as they choose the wrong game theory. Also, some company would cause serious survival problems. Due to the dangerous of competition, the oligopoly companies will focus on Non-price competition, for example, advertising, branding development, and collusion. (Anderton, 2008) As Gillespie. A(2008) claim that, Non-price tournaments will lead to the marketplace mix. Whenever a company determines to try a market combination, it will promote products with creative advertisements, select suited places for sales and set sufficient prices to attract target consumer communities. Although the methods of advertising, branding development, and collusion are three ways to help a oligopoly organization choose be monopoly company for getting more revenue, these ways cannot determinate the price leave in oligopoly market. The Price Rigidity is another process of oligopoly market. To keep the secure price is a safety way to star oligopoly business. If the costs change on the market, the companies craze to improve the same rates of the purchase price. Furthermore, Collusion is another significant aspect of oligopoly. This element as a useful method of businesses in oligopoly which can help the business to achieve increased profit than they do not cooperate. Furthermore, the firms can control the industry by colluding the outcome of the products and set the price". (Anderton, 2008)
Recently, whether the oligopoly market has more beneficial for consumer or not is a discussion brought into open public attention. Both attributes of the quarrels are well-supported with convincing evidences.
One significant disadvantage would be that the oligopoly company established high price by colluding each other. Because of this, the oligopoly company possesses a huge percent of goods in industry. They are able to collude the other person to set an increased price to make revenue. For collection higher price to sell goods for making profit, the supermarkets may restrict the end result to raise the price in special holiday break. The consumers have to simply accept this price because they cannot choose the goods from other stores.
Another negative aspect is that colluding the purchase price has made bad influences for poor buyer improving the standard of living. The supermarkets placed higher price to market goods could cause bad effect to the consumers who are in low income. These consumers may difficult to buy goods because of high price. They have to buy some poor goods to support their lifestyle. Hence, the oligopoly supermarkets may have bad effect on improving the life quality of the consumers.
Despite the disadvantages above, for consumers, there are a few positive factors under oligopoly supermarket. The merits of the oligopoly supermarket for consumers have several points. To begin with, the consumer can benefit from the high quality and friendly-use products. As the oligopoly targets non-price competition, more companies want to charm buyer by producing advanced and customized product. For this reason, to build up or invent the product, the oligopoly companies are more prepared to put money to study. The consumer can use comfortable and strength product under oligopoly market.
In addition, the buyer would enjoy the warm and thoughtful service in the oligopoly supermarket industry. The oligopoly companies aren't only appeal consumer by producing advanced product, but also appeal to buyer by growing marriage with them. In the supermarket industry, the corporation may give attention to customer services. Tesco, for illustration, provides gas service and insurance services to consumer. The purpose of Tesco is trust consumer build good impressive, additionally, catch the attention of more consumers by good service.
Thirdly, consumer would benefit from short-run price battle. Corresponding QQ (2019) reported, On1st/Jan/2010 in supermarket industry of UK, the price war had started. In the supermarket industry, if one organization fall the price down, other supermarkets would reduce the price for fearing lost buyer. Hence, the purchase price war would start. Because of the price war, consumer can buy goods in lower price.
After the very long time debate, we can bring to the conclusions that the supermarket industry in United Kingdom is oligopoly market. Furthermore, for consumer has merits and negative factors. I favor oligopoly because the oligopoly company has capability to build up product and progress the promotion and service industry The negative attributes of oligopoly industry can not be avoided. Pertaining to this reason, we ought to support the government set laws to lessen the problems of drawbacks. These polices such as control the price which not only can help supermarket earn income, but also can offer supermarket to set very high price give stress to consumers.