1. Have supermarkets become too big to the extent that they are damaging competition?

740 WordsDec 30, 20133 Pages
The growth of supermarkets does however have some benefits for competition. Firstly, due to the uniformity of products, prices are easily comparable across stores for consumers. This means they can compare pricing strategies of different supermarkets and see which has the most competitive pricing, therefore get the best deal available to them, increasing competition and allowing consumers to make a more informed choice when buying. Prices of commodities do not fluctuate a lot because of this, as competitors must maintain constant prices, therefore consumers do not have to worry about the price of necessary items changing suddenly. Global commodity prices are therefore determined by the market, rather than by the retailers such as the large…show more content…
The big supermarkets can then pass these savings on to consumers through reducing the price of products and increasing competition within the market. This would benefit competition through avoiding artificially high prices for products which are widely sold. Through implementing and demanding more economies of scale, producers and suppliers will have to become more competitive, and as a result will improve the quality of their produce. Therefore it cannot be said that supermarkets are soley damaging for competition as there as some advantages of their size for consumers as well as producers, which is increasing competition. 2) Have supermarkets become too big to the extent that they are damaging competition? It is argued that supermarkets have become too big to the extent that they are damaging competition as there are only a handful of them dominating the food market; Tesco, Asda, Sainsbury’s and Morrison’s to name a few. Because of their large market share in the industry, they are driving away smaller firms, which ultimately is their competition. By eliminating their rivals i.e. competition they are or going towards becoming an oligopoly market. Being an oligopoly means having a significant market share in the industry, high barriers to entry, huge sunk and set-up costs which all lead to less competition. This ultimately lowers the number of firms in the industry, as named above, which means less choice for

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