Introduction

In UK supermarket industry, there are four chief food market markets Tosco, Sainsbury, Asda, Morrison or Safeway. ( Oligopoly ticker: 2007 ) . It takes 72.5i?… of the market portion. They besides have 75i?… of the concentration ratio. These four companies are besides mutualist, the price reduction schemes are similar. Harmonizing to the socyberty ( 2007 ) there are high barrier to entry in the supermarket in UK. Harmonizing to the feature of the UK supermarket industry, it is proved that the supermarket industry in UK is an oligopoly market.

Harmonizing to Anderton ( 2004 ) the oligopoly is a sort of market construction that the whole market is controlled by the few mutualist houses. Anderton ( 2004 ) besides stated the market construction of oligopoly is controlled by few houses, interdependent and barriers for the other houses to entry. The market conductivity of oligopoly is non-pricing competition, monetary value rigidness L-shape norm cost curves and collusion. ( Anderton: 2004 ) . Tutor2you ( 2007 ) besides shows that the oligopoly has an of import feature that the merchandises are similar which the few houses selling.

Therefore, harmonizing to the UK supermarket industry and the feature of oligopoly. The market construction of UK supermarket has the features of the oligopoly.

Main Body

Harmonizing to Anderton ( 2004 ) an of import feature of oligopoly is mutualist. It is said that if a company do a market or monetary value scheme, that will act upon other houses. Therefore, if one company addition or diminish it monetary value, the other companies will besides hold some influences. These companies have to hold the same understanding of how they take any alteration in monetary value and end product. The besides need to take the similar schemes in order to maximise their unnatural net income. Thus its consequences in the non-price competition and monetary value rigidness in the oligopoly market. It will avoid the monetary value war. In perfect competition market, monetary value is an of import factor of competition. ( Anderton: 2004 ) . Therefore, in order to maximise their net income, some houses may put the merchandise in low monetary value which the quality can non be securitized. The clients will purchase the merchandise in low monetary value but the can non hold a high quality goods.

Anderton ( 2004 ) stated that the market construction of oligopoly is the whole market is controlled by few houses. It has the same significances that these companies take the big per centums of market portion. In some inspects, it guarantee the stableness in the market. It can avoid the barbarous competition in the market. In perfect competition market, the houses can take any schemes to do. Therefore some houses will disregard the merchandise and services. It besides causes the monetary value war which is irrational.

Therefore the oligopoly market can so cut down the malignant competition in market. Non-price competition and monetary value rigidness can avoid the barbarous and irrational monetary value competition. So the companies can guarantee the quality of the merchandise and the services. The clients can take advantages of the high quality good and the stable market.

On the other manus the oligopolies have some disadvantages because of the feature of non-price competition and the monetary value rigidness. The houses are mutualist in oligopoly market. ( Anderton: 2004 ) . These companies are influenced by each other. So they set the same monetary value of their merchandise. That will take to the deficiency of the monetary value competition. In order to maximise their net income. They set the high monetary value which consequences in the clients have to pass much money to purchase merchandises.

In add-on, there are high entry barrier in oligopoly market. ( Anderton: 2004 ) . Thus, many smaller houses and some new company are non able to entry in the market. If the markets merely controlled by few houses and new company can non entry, the new engineering and new schemes are besides barricading off the market. Therefore these few companies can non to do advancement in the selling development. What ‘s more, if the companies are deficiency of competitions, they have low propulsion to do advancement by themselves. Therefore, the quality of the merchandises and services are non able to better because of the stagnancy of these few companies.

In the UK supermarket industry, the oligopoly market can avoid the barbarous competition in the supermarket industry. It can besides cut down the irrational monetary value competition to protect the clients ‘ cyberspaces and stabilise the market. However, the deficiency of the monetary value competition in the oligopoly market will besides take the supermarket raise the monetary value excessively much. The high entry barriers result in the deficiency of competition make the supermarket difficult to do advancement. In these facets, oligopolies in the UK supermarket industry have less benefit to clients.

Decision

In brief, harmonizing to the grounds in the organic structure because of the feature of oligopoly including interdependent, non-price competition and monetary value rigidness, oligopoly market can avoid the monetary value war and the irrational competition. It can do the market stable and the clients can besides take advantages in this market construction because they can purchase high quality merchandises in a sensible monetary value.

Mentions:

Anderton A. ( 2004 ) Economics ( 3rd ed. ) Ormskirk, Causeway Press Ltd.

Oligopolywatch ( 2007 ) [ Online ] , British groceryoligopoly. Available at:

( Accessed 19th February 2010 )

Socyberty ( 2007 ) [ Online ] , Government Intervention In The UK Supermarket Industry. Available at:

( Accessed 19th February 2010 )

Tutor2u ( 2007 ) [ Online ] , Oligopoly. Available at:

( Accessed 19th February 2010 )