Economics - Planning - and Policy

Question: Discuss about theEconomics, Planning, and Policy. Answer: Introduction This study has been constructed based on the three different types of markets in Australia. The markets are such as monopoly, oligopoly, and monopolistic competition. In this connection, this study has tried to measure the pricing strategy, the consumer as well as producers behaviour. In addition, this study is beneficial to identify and understand the differences among these three markets. On the other hand, this study has also tried to discuss the real life example of these three types of market structures. In case of the monopoly market structure, there are single sellers but a number of buyers. The sellers set out the prices of the manufacturing goods (Bagdikian 2014). Higher the monopoly price leads to the organisations marginal cost as well as larger will be the monopoly profitability. In case of the oligopoly market, the larger organisations are being dominated by the smaller sized business. The organisations under oligopoly can employ the customs of trade that is the market s haring, collusion etc. On the other hand, in case of monopolistic competitive market structure, there are a large number of products in the market. These products are differentiated with each other (Roberts 2014). There it can be concluded that manufacturing goods are not perfectly substitute with each other. Furthermore, some relevant figures related to these three markets have added the essence of the study. Market structures In case of monopoly market structure, there exist only one producer and the number of buyers. In a synopsis, Askar (2013) mentioned that in the monopoly market structure there exist single seller. In this type of market structure, items and the factors are substitute with each other. Hence, it can be stated that the competition is not present under monopoly market. As the competition is not present, the sellers get the power to fix the price of the products. As a result, it can be concluded that why the sellers in this market aimed to fix the larger price of the manufacturing goods. According to Economides and Tag (2012), the marginal cost of the business will be effectively enhanced. In a nutshell, it can be mentioned that business can maximise the profitability under the monopoly market structure. Therefore, as per the statement of Minamihashi (2012), the producers or the sellers are assumed as the price makers while the customers are seemed to the price makers. On the other hand, the monopolists have the power to modify the price and the value of the manufacturing items. The sellers are able to sell the lowest amounts of products in turn of higher prices in terms of lower elastic market structure. Figure 1: Structure of the monopoly market (Source: Created by author) The above figure depicted that the monopoly equilibrium under short run market structure, the Australian firms are capable to maximise the profit of a business. The manufacture of the business will be equivalent to the marginal revenue as well as the marginal cost. The organisation is able to modify the price, which is based on the organisations average revenue curve. The differentiation among the average revenue and the organisations average cost can be multiplied to evaluate the amount sold by the specific organisation. Therefore, Bagdikian (2014) opined that the earning profit by the organisation can be measured. In this purpose to describe the example of monopoly market, it can be stated that the per unit price of the electricity is fixed by the Australian electricity authority whereas the customers need to pay off the estimated price of the electricity. They are not able to avoid this price of the electricity. Under the oligopolistic market, the total number of smaller sized organisations can dominate the comparatively large number of firms. In this context, it can be stated that the smaller sized organisations have the larger power to acquire the larger amount of market share. In the words of Feng, Li and Li (2014), oligopolists are able to diminish the competition and are also able to set larger price of the products for the buyers. Therefore, they are assumed as the price makers compared to the price takers (Okuguchi and Szidarovszky 2012). As a result, it can be concluded that oligopolies allowed to enhance the profitability margin of a business above the true market structure would consider. In addition, the oligopolies organisations can experience the super normal profitability in the long run. On the other hand, Levaggi and Montefiori (2013) cited that the manufacturing products in oligopoly market can be of homogeneous type or can be heterogeneous type. In case of the non price com petition under this definite type of market, the brand and the product loyalty, different types of the products, advertisement are considered as the suitable examples. Moreover, OPEC is the appropriate real life example of Oligopoly as it has a capacity to control the world price of the oil (Oikonomou et al. 2012). Figure 2: Kinked demand curve in case of oligopoly market structure (Source: Created by author) The above figure illustrated the demand for the factors, which is relatively elastic and the price of the another organisations are constant. Sometimes, there will occur the price war in the market between the organisations due to the reduction of equivalent price. The equilibrium n this above case has been represented by E. Under the monopolistic market structure, Zhelobodko et al. (2012) opined that within the market, imperfect competition can be observed. There are a number of sellers and each of them is seemed to be different. As a result, it can be stated that the manufacturing goods are perfect substitute with each other. Under monopolistic competition, organisations consider the price charging strategy and it can be stimulated by the opponents. In this context, the producers do not take the self prices of the items. According to Roberts et al. (2014), in case of this type of market structure, there exist a large number of buyers as well as sellers. Moreover, none can get the power of controlling of the total price of the marketed producing goods. Instead of this, the consumers are able to predict the price of the opponents manufacturing goods and it may be equivalent. Furthermore, Zhelobodko et al. (2012) mentioned that each of the supplier has degree of control regarding the price of the goods. Figure 3: Monopolistic competitive market structure (Source: Created by author) This figure 3 aimed that the organisation produced where the marginal cost is equivalent with the marginal revenue. The demand curve, which is the marginal revenue curve, has been changed due to the entering of the manufacturing organisations in the market. As a result, the competition between the organisations has been raised. As per the discussion, it can be stated that the Australian restaurants are the appropriate examples of monopolistic competition. Conclusion From the above discussion, it can be observed that the overall study has been constructed on the concept of three different types of market structure. The markets are such as monopoly, monopolistic competition and oligopoly. This study is also helpful to estimate the consumers and the suppliers behaviour of each of the market. Moreover, the pricing strategy of these three types of markets has also discussed. On the other hand, the real life example of each of the market structure has been mentioned. References Askar, S.S., 2013. On complex dynamics of monopoly market.Economic Modelling,31, pp.586-589. Bagdikian, B.H., 2014.The new media monopoly: A completely revised and updated edition with seven new chapters. Beacon Press. Economides, N. and Tag, J., 2012. Network neutrality on the Internet: A two-sided market analysis.Information Economics and Policy,24(2), pp.91-104. Feng, Y., Li, B. and Li, B., 2014. Price competition in an oligopoly market with multiple iaas cloud providers.IEEE Transactions on Computers,63(1), pp.59-73. Levaggi, R. and Montefiori, M., 2013. Patient selection in a mixed oligopoly market for health care: the role of the soft budget constraint.International Review of Economics,60(1), pp.49-70. Oikonomou, V., Di Giacomo, M., Russolillo, D. and Becchis, F., 2012. White certificates in the Italian energy oligopoly market.Energy Sources, Part B: Economics, Planning, and Policy,7(1), pp.104-111. Okuguchi, K. and Szidarovszky, F., 2012.The theory of oligopoly with multi-product firms. Springer Science Business Media. Roberts, K., 2014. The limit points of monopolistic competition.Noncooperative Approaches to the Theory of Perfect Competition,3, p.141. Zhelobodko, E., Kokovin, S., Parenti, M. and Thisse, J.F., 2012. Monopolistic competition: Beyond the constant elasticity of substitution.Econometrica,80(6), pp.2765-2784. Minamihashi, N., 2012. Natural monopoly and distorted competition: evidence from unbundling fiber-optic networks.