Oligopoly Market in UK Supermarket Industry

Oligopoly Market in UK Super foodstuff IndustryOligopoly Market in UK Super merchandise IndustryIn this essay I go out search the selective information about supermarket industriousness in the UK, focus on the trait of oligopoly market and try to find out the effect of this market structure to customers, analysis its advantages and disadvantages.According to my search, there ar a five big supermarket companies in the UK Tesco, Asda, J Sainsbury, Safe mood and Morrisons. We can see in the keep abreasting diagram, in 2003 and 2008, Tesco is passim having the most market share and the Asde .J Sainsbury Safeway and Morrisons always competitive with each opposite, having a large market share. So, the supermarket industry in UK is oligopoly market.The reason why the UK supermarket industry is oligopoly market for the follow reason1. Supply in the industry mustinessiness be concentrated in the hands of relatively few firms. (Anderton A. (2004322). In the UK, these supermarkets con sider how ofttimes to supply and maybe make evaluate that how much their competitors will supply so that to insure the supply2. Non-price competition (Anderton A. (2004322). In UK supermarkets, in rear to expand their market share, non-price competition has become a marketing strategy, As Revision Guru (2010) the supermarket will use different kinds of furtherance or some way to encourage the con nerveer to taint more.3. Collusion. Collusion is much a feature of the behaviour of firms in oligopolistic markets where it is non illegal. (Anderton A. (2004323)4. Many markets are dominated by brands. (Anderton A. (2004323) .Every firm may elicit the nearly the aforesaid(prenominal) good, in order to discriminate their good, many firms will make it as a brand to move higher price.5. Price rigidity. Price in oligopoly market changes far slight than perfect competition in market. (Anderton A. (2004323)The to a higher place is the characteristic of the oligopoly marker, and UK su permarket industry is match its characteristic, therefore, I draw a refinement UK supermarket industry is oligopoly market. In the follow section, will focus on intervention the advantages and disadvantages of this market structure for the consumers.In the oligopoly market, consumer can benefit from many ways. depression of all, in the oligopoly market, consumers may defend a kick downstairs service a. For cause in UK supermarkets, it is not only Tesco, but withal Asda, J Sainsbury, SafewayThat means, consumers shake choice to where they demoralize. As I mention above, oligopoly market is non-price competition, all the supermarkets sell almost the same good in the same price, in order to earn more money, the compete supermarkets may use different way to expand their market share, changing their marketing mix such as Internet shopping for customers, Store Loyalty cards, Innovative use of engineering science for shoppers including self-scanning machines and so on (Revision Gu ru (2010), by changing in four electron orbit product, promotion, place, pricing so that can promote the development of service of the supermarkets. In this process, consumers can enjoy a better and convince shopping service.Secondly, in the oligopoly market, consumers have more opportunity to buy a new and innovative produce. According to Buzzle (2010), in the oligopoly market, because of the strong enterprise strength and a solidification of funds, these companies will invest much money in produce look so that to create new produce, also, companies want to be more competitive, they must have something new to attract consumers. Therefore, consumers can benefit from this new produce to improve their living.Thirdly, in the oligopoly market, the price is more inactive, consumers can accepted it. In the oligopoly market, the price change very fiddling, because if one company change price, other company must be affected and have some reaction, For instance, match to Worve (2010), Tesco if reduce 3% to 25% of each good, this will increasing its revenue enhancement and even increase its market share expand 12% in eight weeks. Besides, in the oligopoly market, other companies will also reduce their price, therefore, the consumers may benefit from this price war, saving 150 a year. The reason why the supermarket will decrease their price is form the kinked demand curve theory, the supermarkets actuate is accepting the Kinked Demand Curve. If one firm reduces their price, other firms will follow to reduce so that to keep their market share so in the oligopoly market, customers may also benefit too, the customers not only had a stable price for goods, but also can buy a cheaper goods.However, oligopoly market also has it advantages for consumers.Firstly, high barrier to entry the oligopoly market also is a disadvantage to consumers. Because there are a few companies in oligopoly market, such the UK supermarket, there only a big firms competed in the market, the little companies do no have enough power to completive with that big one, therefore, some little companies may be quitted the market ,or some even can not entry the market. Mail Online (2010). The little supermarkets quit means consumers have less choice it is a disadvantage for consumers.Secondly, connivance among the compete supermarkets it is also cause by the first disadvantage. As I mention before, the collusion is the characteristic of oligopoly, the firms want to keep their revenue so that to increase their price, between firms, they may collude with each other illegally. Consumers are forced to buy the goods in a higher price Telegraph2010said that some(prenominal) exchange of information between retailers is bound to distort prices at the spending of consumers , thus it can be seen that this is a disadvantage for customers.In sum up, the research I have study about UK supermarket industry I find that UK supermarket industry is an oligopoly market, and customers can bene fit a lot. As I mention before, consumers can not only have a better service, but also be provided acceptable price of good. Besides, for customers, the most most-valuable thing is the quality and price of goods, in the oligopoly markets, because of completion, every company will provide a new and advanced produce for customers. However, in this oligopoly market, because of the characteristic of oligopoly market, high barrier to entry the market and the illegally collusion, customers may mislay chance to meet other new supermarket in the market, that means customers have fewer choice and more easily to be forced to buy good in higher price.In order to make UK supermarket better, government should chink whether companies have colluded with each other, to protect the consumers benefit.REFERENCESAnderton A. (2004) Economics (3rd ed.) Ormskirk, Causeway Press Ltd. (Accessed fifth January 2010)Buzzle (2010) On line The Benefits of Oligopoly lendable at http//www.buzzle.com/editorials/ 10-27-2002-29003.asp (Accessed 5th January 2010)Mail Online (2010) On line Stores Sold Supermarket Sweep prepare Choice Shoppers in stock(predicate) athttp//www.dailymail.co.uk/news/article-490986/Stores-sold-supermarket-sweep-create-choice-shoppers.html (Accessed 5th January 2010)Revision Guru (2010) On line OligopolyAvailable at http//www.revisionguru.co.uk/economics/oligopoly.htm ) (Accessed 5th January 2010)Single Marketing Ltd (2010) On line UK MarketAvailable at http//www.singlemarketing.co.uk/uk_market.html (Accessed 5th January 2010)Teagasc (2010) On line, Retailer Dominance and the Impact on Farmers from increase to SustenanceAvailable at http//www.teagasc.ie/publications/2004/20040226/paper2.asp (Accessed 5th January 2010)Telegraph (2010) On line, UK Supermarkets Fixed milk and Cheese PriceAvailable atTutore2U(2010) On line Kinked Demand Curve under(a) OligopolyAvailable at http//tutor2u.net/economics/content/topics/monopoly/kinked_demand.htm(Accessed 5th January 2010)W orve (2010) On line Oligopolies in Supermarkets testifyAvailable at http//www.wovre.com/revision/oligopolies-in-supermarkets-essay/(Accessed 5th January 2010)