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Monopoly, Oligopoly And Monopoly Competition In Australia

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Question:

Discuss about the Monopoly, Oligopoly and Monopoly Competition in Australia.

 

Answer:

Introduction

In a contemporary business environment of the Australian market, Monopoly, Oligopoly and Monopolistic competitive market structure can be found in significant business industries. The study of different market structures can identify the operations management of the organisations. The article has reflected the monopolistic market operations of Australia Post and the impact of the same on SMEs. Through the identification of the strategic moves of Australia Post, the current position of other SMEs and start-up businesses in the Australian postal industry can be determined in the study paper. Furthermore, for significant knowledge of different market structure, a brief discussion of the three identified market structures in Australia has been presented in the paper for further consideration (Kehoe, 2016). Along with that, the anti-competitive tactics of the monopolistic business structure of Australia Post has been described in the article of Broede Carmody to notify the business concepts of such firms (Carmody, 2015). Another article has been selected to discuss the future of oligopoly market structure in Australia. Understandably, an increase in modern corporate rivalry has been contributed to the breakdown of oligopoly market structure in the country. Therefore, aggressive competition can be seen in the oligopolistic competitive market to become the frontrunner. Moreover, many organisations operating within the oligopolistic market structure have forced to compete in the market.

Different Types of Market in Australia

Considering the chosen articles, it can be seen that different types of market exists in Australia. The markets are differentiated on the basis of the power of the seller and the price mechanism that derives the demand and supply in the market (Dasgupta & Ushio, 2011). Furthermore, it has been found that all types of the market such as monopoly, oligopoly as well as monopolistic competition exist in the Australian economy.

Monopoly Market

Considering the monopoly characteristics, it can be seen that Australia Post act as a monopoly business in the Australian market. It does not allow any private postal company to deliver parcels to the government post offices and controls the expansion of private postal companies in the economy. According to Carmody (2015), the Australian Post hurts the small businesses in the market by not allowing them to trade freely in the market (Carmody, 2015). Hence, the power of price and control over the market supports Australia Post to rule the industry. Not only the Australia Post acts as a monopoly business in the Australia market, but also the Railway service and Water Service of the Australian government are considered as leaders in the monopoly market (May, 2015).

The Commonwealth Government is the sole authority to decide the price of services because of no other competitors in the market. The customers are bound to buy these services because they are the necessity of human life that cannot be substituted by other services (Mankiw, 2016). Hence, the existence of monopoly can be evident from the article as well as in the real life scenario of the Australian market. These monopoly leaders do not allow other business owners to enter those service industries in which they rule (Misiolek, 2010).

 

Oligopoly Market

The analysis shows that Australia has been a great market for Oligopoly businesses. An oligopoly business avoids price wars and tends to adopt similar prices for similar products. Some of the examples of Oligopoly businesses in Australia are Kelloggs, Coca-Cola, Dulux, Carlton United, Bridgestone, Dunlop and Hoyts. It is important to note that, when prices are raised, all firms do it together to avoid price wars and immense rate of competition (Eldor & Zilcha, 2010). In the year 1995, the government of Australia introduced the Trade Practises Act that safeguards the customers from unjustified practices of the oligopoly businesses (Carmody, 2015). Along with that, the law helped to maintain a balance in the market to reduce the level of competition.

Considering the current market scenario, it can be seen that Oligopoly in Australia is on a verge of death. The current policies of the government provide free entry to new rivals that increase the competition level in the market (Bose & Gupta, 2012). Hence, it leads to a price war to survive and seek success in the Australian market. Hence, it can be seen that Australian market has turned to be a perfectly competitive market in the current business scenario.

Monopolistic Competition Market

Through the identification of existing Monopoly and Oligopoly market structures in the Australian business industry, an analysis must be presented to understand the current status of the competitive market. In contemporary, challenging circumstances, some of the heavy-weight oligopolistic business firms have forced to adopt competitive market structure due to the massive business rivalry. Airways sector, health industry, financial services, telecommunication services, educational sector, retail industry, and restaurant and food industry have been included within the competitive market structure in Australia (Smith, 2015). Due to the latest technological development and infrastructural growth, each of the companies is struggling for existence. Through the identification of customer’s satisfaction point, efficient marketing mix, pricing strategies, additional services and marketing approaches have been implemented to create competitive advantage in the market structure. Meanwhile, many oligopolistic firms such as coal and mining corporations, oil and gas companies and unique services providers have been forced to compete. Moreover, massive demands from the huge market clients and digital improvements have created significant challenges for the business operators in the country (McEachern, 2012). After decades of significant profitability margins, many oligopolistic enterprises have to share the market with latest business competitors. As a result of the scenario, customers of Australia have been significantly benefitted as they have selected the best products and services based on research of quality and pricing model offered to them.

Conclusion

At the end of the discussion, the competitive study on Monopoly, Oligopoly and Monopolistic aggressive market structure, a significant conclusion can be drawn on the performance of the organisations operating in different sectors. For instance, the monopolistic business model of Australia Post has affected the functions of SMEs operating in the industry. As a result, the monopolistic dominance has been retained for Australia Post. On the other hand, the increase in the rivalry in the oligopolistic market has forced the market giants to share the market with new entities. Therefore, new developments have to be ensured within the oligopolistic market structure to control the oligopolistic business status in the massive Australian market.

 

References

Bose, A. & Gupta, B. (2012). Mixed markets in bilateral monopoly. J Econ, 110(2), 141-164. https://dx.doi.org/10.1007/s00712-012-0310-8

Carmody, B. (2015). Australia Post is hurting small businesses with PO Box monopoly, says delivery company Sendle - SmartCompany. SmartCompany. Retrieved August 2016, from https://www.smartcompany.com.au/growth/49035-australia-post-hurting-small-businesses-with-po-box-monopoly-says-delivery-company-sendle/

Dasgupta, P. & Ushio, Y. (2011). On the rate of convergence of oligopoly equilibria in large markets.Economics Letters, 8(1), 13-17. https://dx.doi.org/10.1016/0165-1765(81)90086-0

Eldor, R. & Zilcha, I. (2010). Oligopoly, uncertain demand, and forward markets. Journal Of Economics And Business, 42(1), 17-26. https://dx.doi.org/10.1016/0148-6195(90)90017-7

Kehoe, M. (2016). Quality Uncertainty and Price in Monopoly Markets. The Journal Of Industrial Economics, 44(1), 25. https://dx.doi.org/10.2307/2950558

Mankiw, N. (2016). Principles of microeconomics. Australia: Thomson Nelson.

May, D. (2015). Export instability when international agricultural markets operate under oligopoly.International Journal Of Trade And Global Markets, 8(2), 142. https://dx.doi.org/10.1504/ijtgm.2015.069424

McEachern, W. (2012). Microeconomic principles. Australia: South-Western Cengage Learning.

Misiolek, W. (2010). Effluent taxation in monopoly markets. Journal Of Environmental Economics And Management, 7(2), 103-107. https://dx.doi.org/10.1016/0095-0696(80)90012-1

Smith, M. (2015). The death of the oligopoly: Australia's incumbents face new rivals. Financial Review. Retrieved August 2016, from https://www.afr.com/brand/chanticleer/the-death-of-the-oligopoly-australias-incumbents-face-new-rivals-20150421-1mq11b

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