Competition in Australia Grocery Market.: a St Essay

2360 Words10 Pages
Recent studies have acknowledged a major public concern for the competitiveness of retail grocery sector in Australia. Coles and Woolworth Limited dominate over 70 % of retail market shares; hence dictate the retail grocery sector. As for consumer, grocery prices have risen significantly over the last few years. This essay will, examine the type of competition in Australian grocery retail market; define ‘workable competition’ and ‘vertical integration’. It would also suggest for successful entry of a new competitor. Competition in retail grocery market in Australia Within the model of competitive marker there are: perfect competitive and imperfect competitive model. In theory, Perfect competitive is a market with many sellers and buyers which have insignificant or no control of the market, every participant are perfectly informed of price and are prices takers (Taylor, 2009). Firms’ products are homogeneous and price is determined by market’s supply and demand. In addition, Hubbard (2010) argued that in a perfect competitive market there are no barriers of entry and no barriers of exit. However, hardly any market is perfectly competitive since none could meet perfect competitive principles. Hence, most market are imperfect competitive. There are two main type of imperfect market. The most extreme case is monopoly, where the market is dominated by a single firm. Since, the firm’s products does not have any close substitute the monopoly firm could control price, thus gain supernormal profits. Another imperfect competitive market is oligopoly where few firms control the majority of the market. In this scenario, competition between firms exist, companies could cooperate for a mutually beneficial payoff or compete aggressively for market shares. (Hubbard, 2010) In the case of Australian grocery, there are two dominant chains: Coles (35% market shares), Woolworth

More about Competition in Australia Grocery Market.: a St Essay

Open Document