Introduction:
Market is defined as a place where the transaction of goods & services take place between two parties, one is known as the buyer & the other one is seller. In a market money is the main medium of transaction. There are different features of a market & these help in determining the structure of the market. These features are the numbers of buyers & sellers, the degree of restriction of entry & exit in the market & the feature of the products. All these factors help in determining the price of products of an organisation. The restriction over entry & exit reduces the degree of competition in the market. There are different kinds of market structure & these have some unique features. The market features determines the market structure of a particular industry (Askar, 2013). As a result the market is divided into the perfectly competitive market, the monopoly market, the oligopoly market & the monopolistic market. Identification of the market structure of an organisation or an industry is important in order to operate in the market. In the present essay different market structures in the context of the Australian tourism sector has been discussed.
Different Market Structures in Australia
Tourism industry is one of the largest industries in the Australian economy. It contributes significantly in the GDP of the country. Tourism industry comprises of different other industries & these are the hospitality industry, the transportation sector & at the same time information regarding the tourism like the travel agent or travel operators. As a result the market structure of the travel & tourism industry also ranges from the perfectly competitive market to monopoly & oligopoly market. Before initiating the discussion over the tourism industry in Australia & its market structure, it is important to illustrate different kinds of market structures in general (Nellis & Parker, 2006). The market structure has been divided on the basis of different features & these have been discussed below:
Monopoly Market
It is one of the market structures & it is characterised by the large numbers of buyers & single seller in the market, the restriction over entry & exit in the market & incomplete information to customers. In this market the price is determined by the seller of the product. The bargaining power of sellers in the market is very high. Sellers in this market are price maker. Therefore demand curve is inelastic in nature. Large change in the price leads to the small change in the quantity to be sold. The equilibrium quantity is determined at the intersection point of the marginal cost & the marginal revenue. There are few important concepts in relation to the monopoly market & one of these is the price discrimination. Since sellers of the product have complete authority over the product, as a result they can charge different prices to different customers. This is defined as the price discrimination. There are different degrees of price discrimination. In case of Australia there are different organisations which have monopoly power in the market (Dunne et al., 2013). In Australia there are different travel & tourism organisations which have dominating power over the market.
Monopolistic Market
Another market structure is the monopolistically competitive market. In case of the monopolistic competition one of the main features is the large number of buyers & seller. This market is also characterised by the large number of similar kinds of products. In the monopolistically competitive market the degree competition is in between the perfectly competitive market & the monopoly market. Since there are large numbers of substitutes available in the market, it reduces the bargaining power of sellers. In this market there is also freedom regarding the firm entry & exit.
Oligopoly Market
This is another important market structure & in this market structures the number of sellers very small but the number of buyers is large in number. This provides large bargaining power to sellers & this also helps in setting prices high in comparison to the competitive market. One of the most important features is the cartel formation (Von Stackelberg, 2010). This helps in increasing the profit level of sellers.
Tourism Industry & Market Structure
One of the most interesting aspects in cases of the tourism industry is that it consists of large number of other industries & these make the industry diverse in nature. Different industries like hospitality industries, the transport industry which facilitates the tourism industry & different levels of travel agents operate under the tourism industry. In few industries very small numbers of organisations dominate the whole industry & this provides the monopoly power to these organisations (Zhelobodko et al., 2012). In the accommodation sector there are large numbers of hotels provides their services to travel & tourism industries. Out of these large numbers of hotels few have monopoly power & one of these hotels is Cradle Mountain Hotel. The accommodation sector in Australia has large chains & it is also a feature of oligopolistic competition. In case of the transportation sector there are large numbers of service providers. Though the competition level in this sector is comparatively high, still some kind of monopoly in the domestic market exists in Australia. On the other hand travel agents are also part of the tourism industry. Since different travel agent offer different holiday packages, customers in the market have large numbers of substitutes. This is a characteristic of monopolistic competition (Baldwin & Scott, 2013). Inspite of this Council of Australian Tour Operator possess monopoly power in the tourism industry in Australia. With the increase in the numbers of service providers the competition is increasing, still it is evident that few tourism operators play a dominating role in the market.
Conclusion:
From the above discussion it can be concluded that the market structure of an industry consists of different features. In case of tourism industry there are large numbers of service providers & as a result different kinds of market structure is evident in the industry. In few sector like the accommodation sector monopoly power is present (Pizam, 2009). In the transportation sector the market structure varies from the monopolistic to oligopolistic competition & in case of travel agent both the monopolistic competition & monopoly are evident.
References:
Askar, S. S. (2013). On complex dynamics of monopoly market. Economic Modelling, 31, 586-589.
Baldwin, W., & Scott, J. (2013). Market structure and technological change (Vol. 18). Taylor & Francis.
Dunne, T., Klimek, S. D., Roberts, M. J., & Xu, D. Y. (2013). Entry, exit, and the determinants of market structure. The RAND Journal of Economics, 44(3), 462-487.
Nellis, J. G., & Parker, D. (2006). Principles of business economics. Pearson Education.
Pizam, A. (2009). What is the hospitality industry and how does it differ from the tourism and travel industries?.
Von Stackelberg, H. (2010). Market structure and equilibrium. Springer Science & Business Media.
Zhelobodko, E., Kokovin, S., Parenti, M., & Thisse, J. F. (2012). Monopolistic competition: Beyond the constant elasticity of substitution. Econometrica, 80(6), 2765-2784.
