Monopolistic Competition and Oligopoly Market-Samples for Students

Question: Discuss about the Monopolistic Competition and Oligopoly Market. Answer: Monopolistic Competition and Oligopoly Market Monopolistic completion refers to a situation when there are large number of buyers and sellers but the products being bought and sold can be differentiated amongst each other on the basis of the quality, size and other characteristics which enable the firms to charge differentiated prices for the products being so bought and sold (Cucchiella,F.and DAdamo, I., 2015). The fact that the products are different from each other makes the producers and sellers charge different price for the products and that they are being able to have a command in the market. The firms compete between themselves on the basis of the price of the goods and the different product characteristics being offered for sale. It is relatively the most common form of market which is seen in recent times and that the firms do have a large amount of goods with different varieties to offer. Almost all the goods and services which we use in our day to day lives are being operated under a monopolistic competitive market ( Chamberlain,N.and Kuhn,J., 2015).. The reason why the term monopolistic and competitive both is used is because, different firms compete in the same market for similar products. However the products are similar, but they are not identical and hence they tend to create monopoly for their products over a period of time, thereby making them monopolistic competitive in nature. We can take the example of soap, shampoo and any other product of our day to day live which we use and each one of them would relate to this itself (Davey, H., 2011). We are having atleast 10 different types of soap in the market. Although each of the soap is similar in the function, in the sense that they perform identical functions, yet each of them are different from one another in the sense that they have different product features and different product characteristics. Hence the products of different brands have their own uniqueness and that they command their own unique value in the market. The products bein g offered for sale are made in such a unique manner that they have a different market for their own, even when they are having a similar kind of quality and features. Oligopoly market is a kind of market in which there are few sellers who ideally control the entire market form and that they are structured in such a manner that they perform the functions of the market so as to regulate the overall demand in their channel (Beal,E., Wickersham,E.andKienast,P.,2012). The market is so designed that the firms operate and they are having effective control over the entire demand of the market. The products are different from each other in the quality and characteristics. However the basic nature of the product remains the same. The basic differentiator between the monopolistic competitive market and the oligopoly market is that the product is such in the case of oligopoly that there are few number of sellers in the market. This happens when there are restrictions to free entry or that the nature of the product is such that the free entry itself becomes difficult. As a result of such dominance of few players in the market the price being charged and the te rms of sale being offered generally is solely determined by the sellers and that there remains some degree of dominance in the market (Opocher,Arrigo;Steedman,Ian,2009). The markets soon tend to become skewed towards the sellers and the customers are not able to have effective control over the market. One such example is a market of 5 star hotels. The market for 5 star hotels is such that there are only few large players operating globally who control the overall market. This is because the product is such that the more and more players cannot enter the market on a daily basis. Each of the brands provides different kind of services and they have a unique way of delighting the guests (Bangs, J.,201). However it is very difficult for any new brand to enter the market and make space for themselves because of the very high investment and very high technical skills required to open a 5 star hotel and to deliver the kind of service and the quality which it commands (Bienefeld, M.,2009). H ence it becomes difficult for the new players to enter the market. Effectively even though there is similar service which is of accommodation and food and beverage, there are very few firms operating in the market owing to the cost of luxury which is to be provided to the guests and these few firms are able to charge the price which they decide that it should be charged to the customers. As a result the market becomes highly in favour of those players and that they are in a position to influence the market tin the way they desire to do so. The market forms are destined to be proper and that they must operate in the best possible manner so that the firms are operating effectively (Bangs, J.,201). There are large number of demerits which follow from such a kind of completion in the market, the principal of them being that the market structure is not very fair and that the firms may not be conducting their business in the fair manner as they are supposed to conduct. The request and supply is a vital financial marker, and the same has a significant level of effect in the general economy (Dewey,A.,2008). In determination of the financial ideas there is a necessity of the investigation of the request and supply and different monetary issues discover their determination through this component. With the presentation of new general stores in Australia under ceteris paribus condition, there would be an expansion in supply coming about into a fall in costs of the ware. With the adjustment in wage variances there would a move sought after bend, which would prompt an adjustment in the balance, as in a similar amount would now be sold at higher cost. With an adjustment in populace slant there would be an adjustment in the general request bend, and that would again prompt a move popular bend. Presently accepting that the pattern changes against the item, at that point the accompanying would be the circumstance for the item (Opocher, Arrigo; Steedman, Ian,2009). With an adjustment in the purchaser desires and the tastes of the customer and publicizing by the provider, there would be an adjustment in the request bend, as in the same would move either upwards or downwards. Under both the conditions there would be an effect on the balance. Affordable Housing The piece of government is to suit the typical defend, portray and guarantee property rights, and maintain legally binding approaches. All through the twentieth and mid 21st century, government has extended its part in money related life (Anderton, Alain., 2006). The piece of government has stretched out to address gathered business frustrations and externalities by developing their authoritative degree to address common concerns, monopolistic competition and give open stock. Governments have similarly familiar diverse social undertakings with give a social prosperity net to low-wage individuals and senior subjects. Blessings address portions to creators by the organization which diminish their variable costs of age and urges them to expand their yield. The effect of enrichment with a sliding slanting premium twist is to assemble the measure of stock sold and to diminish the business adjust cost (ROY, S., 2011). This is shown in the diagram underneath Government appointments are every now and again offered to creators of authenticity stock and organizations and business wanders obliging some security from ease widespread competition. If the blessing is a guaranteed portion to producers, the lawmaking body will pay the sponsorship each unit to the creator over the new market cost. The gift lessens amicability cost from P2 to P1. Buyers get from consuming more at a lower cost. Producers will get esteem P1 + the enrichment (P1P3) (Bienefeld, M., 2009). The total spent by the assembly on the assignment will be Q1 x (P1P3). This is exhibited in the diagram underneath. Blessings may in like manner invigorate went before with inefficiency among producers when the task of free market forces may achieve a more capable assignment of benefits. There are in like manner extensive stresses that liberal agrarian allocations are provoking whole deal biological issues as agriculturists place assets into genuine developing techniques that undermine the supportability of our regular resources. Affordable housing is basically one of the most important requirements which has to be competed and provided by everyone. The scheme for affordable housing has been widespread in the recent year and this has gained a lot of importance. The reason for such high requirement for the affordable housing is that day to day housing is becoming very costly and that people are not able to afford the basic housing cost (Anderton, Alain., 2006). Also housing is one of the prerequisites for livelihood of people. Hence it is important for one to achieve a system whereby affordable housing can be offered and that they are able to implement the same in all the best possible manner. The government across the globe is taking initiatives in ensuring that the people are afforded with the lowest housing costs and that they are able to provide people with some low cost affordable housing and accommodation measures. The idea behind providing the people with such low cost accommodations is that over the ye ars, people are unable to afford the high cost of living in the cities and the places of their work and they tend to stay at a place where they do not work. This increases their time of travelling and commuting which eventually leads to loss of productivity and thereby overall loss of the productive capacity of the nation. More than that it has also been seen that the housing being the primary requirement of the people, if the same is not provided to the people in the manner in which they desire, it may tend to have dismal impact on the standard of living of the people (White, Graham, 2001). As such it is always advisable to ensure that people are afforded with a good standard of living and that they ensure highest degree of relevance and prominence in the market. More and more projects are now being developed in such a manner that they have to afford some houses for the low income group people of the society and not all of them are available to be sold to the elite class of custome rs. Some of the flats or indeed some portion of the flats are earmarked for some sections of the people which is basically the needed and low income earner group and they have to allow the homes to be given to those class of people. At times it becomes important for the governments and the regulatory bodies to ensure that they provide a proper standard of living to the people. However the people are not always able to afford proper housing facilities in which all the basic necessities can be accommodated with. Hence in those situations the government had to step in to ensure that the people are being provided with such basic necessities at reasonable cost so that there is fair chance to all to live a decent standard of living (ROY, S., 2011). In the absence of proper opportunity to people it becomes difficult at times for others to have a proper living and that in cases may result into poor form of living. Hence the scheme of affordable housing is brought into place which ensures that everyone has a right to stay at good homes and that they are provided with the basic necessities and requirements as and which is desired by the people. In the absence of such schemes it may be so possible that they are unable to a fford a proper living and that they are unable to maintain the standard of living which they must maintain and this might lead to improper situation. Lodging reasonableness can be estimated by the changing connections between house costs and leases, and between house costs and wages. There has been an expansion among approach producers in reasonable lodging as the cost of lodging has expanded drastically making an emergency in moderate lodging. Since 2000 the "world encountered an extraordinary house value blast regarding greatness and length, yet in addition of synchronization crosswise over nations." "At no other time had house costs risen so quick, for so long, in such a significant number of countries."[18] Prices multiplied in numerous nations and almost tripled in Ireland (Sloman,J.andSutcliffe, M., 2003). The government and the regulating agencies have ensured this through a mechanism whereby they impose the liability of ensuring affordable housing on the builders of the residential project. Under this proposal the government has prescribed that a certain percentage of the total area built and developed must be sold at a price which is much below the average price at which the rest of the area is being sold. The price at which these flats are sold may be lower than the cost of construction along with the land cost for those flats. The reason for selling the flat at such low cost is that the flats must be made available to the lower section of the people as well and only on the ground that the flats are not affordable to them the same be denied to them is not a tenable logic and therefore the same is not to be followed with. This has been prescribed in strict law and order and therefore some portion of the flats being constructed are now being left to the disposal of the low sections o f the people and some to the middle income earners and the rest are being sold to the other players in the market (Opocher,Arrigo;Steedman,Ian, 2009). As a result of such dominance in the market the overall market structure improves and that the firm is able to realise the revenue which it expects to earn from the flats by ensuring that the high income earning flats are sold at even higher amount such that to cover up the loss incurred in selling some of the flats at low income level and to the middle income level earning section of the society. As a result the overall situation in the organisation has improved and that the firm is able to develop itself in much higher manner than the same would have been possible alternatively. The ideology is that to ensure that there is highest development of the overall social wellbeing of the people and that no one should be deprived of the basic living which they deserve. Growing population and the limited availability of land is putting more and more pressure on the land resources of the world thereby making the price of the land increase all the more (Krugman,P.andWells,R., 2006). This has lead to a very high increase in the price of the flats which the people can live in and thereby the price of the homes are increasing many folds than what it is ought to be. It is therefore inevitable to take care of those people who are not able to survive themselves and afford themselves a proper house in which they can live in. The regulatory authorities are therefore now required to be more cautious and active towards allocation of land such that the same is considerate in allocation of the same to the poor sections of the people who do not have enough wealth to afford such a high standard of living so as to buy themselves such costly houses to survive (Hicks, J. and Hutt, W.,2011). The reason for such need has lead to the development of a need for affordable housing in the economy which has therefore resulted into development a proper scheme whereby all the developers will have to provide the homes in a proper form so that the interest of each and every consumer is achieved and that none of them is harassed (Sloman,J.andSutcliffe, M.,2003). The overall lifestyle of the people is improved. However care must be taken to ensure that the people who do not form part of the affordable housing scheme must not take advantage of the same and that they should be asked to pay the full price for the home. This is to ensure that the benefit of the scheme is available to only those who actually use those homes for their day to day living and that the scheme is not available to any person who uses the homes for their livelihood. In estimating reasonableness of lodging there are different uses past the cost of the real lodging stock itself that are considered relying upon the file being utilized. A few associations and organizations consider the cost of acquiring a solitary family home; others take a gander at the cost of leasing a condo. Numerous U.S. ponders, for instance, center fundamentally around the middle cost of leasing a two-room loft in a substantial condo complex for another inhabitant. These investigations frequently protuberance together extravagance condos and ghettos, and in addition attractive and unwanted neighbourhoods (White, Graham,2001). While this training is known to mutilate the genuine costs, it is hard to give exact data to the wide assortment of circumstances without the report being cumbersome. Regularly, just lawful, allowed, isolate lodging is considered while ascertaining the cost of lodging. The low lease costs for a room in a solitary family home, or an illicit carport transformation, or a school quarters are for the most part avoided from the figuring, regardless of what number of individuals in a region live in such circumstances. As a result of this investigation philosophy, middle lodging costs have a tendency to be marginally swelled. Expenses are for the most part considered on a money (not accumulation) premise. Hence a man making the keep going installment on a huge home loan may live in formally unreasonably expensive lodging one month, and exceptionally reasonable lodging the next month, when the home loan is paid off. 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