Main Factors of Product Pricing in the Uk

This would be “a market structure in which a few firms dominate” (Economics Online, 2015). When this occurs the market takes on a different appearance that is said to be highly concentrated because there may be several businesses operating in the same market. Heavy hitters in the retail industry would be mass merchant entities such as Wal-mart, Costco, and Target. These massive retailers have a share interest in controlling the retail market by manipulating various barriers of entry. Similar to those barriers of entry that are associated with a monopolized market, higher costs and such, these giants can also manipulate pricing to ensure that a newcomer could not compete. Price undercutting or predatory pricing may be done even at a loss for these retail giants if means keeping the oligopoly market structure with fewer new competitors. Various may be use these oligopolists strong name and customer loyalty base. Often times an oligopoly may experience a kinked-demand curve where there are two distinct segments with different elasticities that combine to form a kink. The kinked-demand curve is a good way to explain price rigidity in oligopoly where one segment is relatively more elastic in prices increasing and the other segment is less elastic in prices decreasing. “The relative elasticities of these two segments is directly based on the

A major feature of an oligopoly market is that any singular firm has the power to set market prices. This is evident in the example of Coles and Woolworths in Australia as they dominate the market share with 72.5%. Due to there only being a small number of firms, they are able to set their prices and change price and

2. (Price Leadership) why might a price–leadership model of oligopoly not be an effective means of collusion in an oligopoly?

An Oligopoly refers to a market structure where-by the suppliers have formed some form of cartel and are acting in unison. In such a case the suppliers have the power to determine the price of the commodity and may set any price.

Price fixing occurs when competitors of the same industry agree to raise, lower, or stabilize the prices of their products. This is classified as a horizontal agreement because it involves competitors. They do this in order to manipulate prices to gain an unfair advantage. The government has a law in place for this issue called the Sherman Anti-Trust Act of 1890. This law requires each company to set its prices and other terms on its own. Generally, the consumer expects the price of a product to be determined by the current supply and demand. This is not the case with price fixing, as competitors use this tactic to skew the market. Price fixing is illegal and difficult to catch, but there are signs that could be helpful in determining if price fixing is in play. If competitors have

As illustrated by Sloman and Hinde (2007), an Oligopoly by nature has price stability, even when there has been no collusion between firms. This theory is based on two assumptions. For example, if Tate and Lyle were to lower their prices, British Sugar and the other rivals would feel the need to follow suit to prevent losing customers to Tate and Lyle. Contrastingly, if British Sugar raised their prices, Tate and Lyle would not follow suit. They would keep their prices the same and gain customers from British Sugar. The kinked demand model illustrates this.

An important aspect to be pondered is the tradeoff amongst the oligopolies between cooperation and self-interest. On the whole it would always be better for the oligopolists if they cooperate amongst themselves and reach the monopoly situation. But as they further their self-interest, they fail to attain the monopoly situation and maximizing their mutual profit. Every ologopolist is lured to hike

A cartel is a secret agreement between multiple firms to keep prices at a higher level than the original market equilibrium. They kind of fix the selling price by doing so. Also a cartel makes sure new competitors can’t enter the market, because when a new competitor would enter, the firms which have the cartel will all lower their prices to a level that is lower than the price of the new competitor, as a consequence the new competitor will eventually go bankrupt.

A market structure in economics describes the state of a market with respect to its competition. There exist several different market structures like perfect competition, oligopoly, and monopolies among others. These markets all produce different types of goods or services, like public and private goods as well as common and collective goods. Firms operating in these different market structures utilize the labor market in very different ways because of very diverse uses of labor in each market structure, so it is important for a firm to use the labor market equilibrium principles to their advantage

Cartel behavior, which refer to the firm cooperatively together, fixing price and increase the price of products, causing the social loss and market inefficient.

In the United States, firms can be investigated for collusion by the anti-trust authority only if there is physical evidence of communication about pricing strategies between competing firms. In the EU and SA, by contrast, competition authorities can investigate merely because they observe that industry prices aren’t at competitive equilibrium.

If organizations behave in cooperative mode to mitigate the competitions amongst themselves it is called Collusion. When two or more organizations agree to set their outputs or prices to maintain monopoly it is called as collusive oligopoly.

Price another element of the four P’s within the marketing mix, out of all the four P’s price is the one that creates sales revenue, the rest are cost (expenses). The pricing decision of the product or service will decided or affects the number of sales and how much it earns. An organization could have the best product however; if the product price too high or low it could result in low or lost profits. So the question is what is the value of the product or service (Mind Tools, 2014)? One of the ways of finding out the value of the product or service is determining customer’s feels the value of product is. This could be done by researching consumer’s opinions about the pricing; this will help establish the price point of product or service

We have learnt from the lecture and text book that the market has the forces to determine the price and quantity of a product traded in a market [1]. The main forces are: demand, supply, elasticity/inelasticity, product

Price – The price of the product maters for everyone whether the company or the customers. It puts a great impact on marketing strategy.