Monopoly Against Indirect Competitors

Topics: Monopoly, Competition, Preference Pages: 9 (2276 words) Published: April 24, 2013

A Research Paper on Monopolies: Ajinomoto VS. Maggi Magic Sarap Submitted to Professor Noemi J. Salgado


A Research Paper on Monopolies: Ajinomoto VS. Maggi Magic Sarap

Chapter One
The Problem and Its Background

A. Introduction
People have encountered and are still dealing with Monopolized companies on a daily basis. From using electricity up to using additives on food preparation. Monopolies dominate the market by being the sole producer of their product, having control over price and lack of competition. Rare is the chance of coming across with a Pure Monopoly nowadays. Although there are still some less pure forms of it such as government owned utilities as well as ‘near-monopolies’ in which a company has a bulk of sales in a specific market. The Monosodium Glutamate which is the signature product of Ajinomoto Co. Inc. nearly fit to the example of being a near-monopoly in our country, the Philippines; having the largest bulk of sales when it comes to additives. Ajinomoto being the signature producer of Monosodium Glutamate, was first marketed in Japan in 1909, having been discovered and patented by Kikunae Ikeda. He found that the most important compound within seaweed broth for common use was actually a glutamate salt, which he identified with the taste umami, a word meaning 'pleasant taste' or 'savoriness'. As the simplest such salt for human consumption, the popularity of MSG helped the company rapidly expand to other countries, having branches in USA, China and other countries. With East Asia becoming a staple consumer of glutamate in its various forms at a rather quick pace, Philippines had Ajinomoto as a Monopoly producing the main additive households use on their cuisine. Although Ajinomoto had been the sole producer of additives used by Pinoys without more ado when it transpired, it didn’t thoroughly gain the repute of being a Pure Monopoly after a few ages. With the emergence of other additives such as Maggi Magic Sarap, which offers more than what Ajinomoto can, not too long ago, competition arose when it comes to substitutes and prices. Maggi Magic Sarap became an instant hit to Pinoy households since it offers not only MSG but also real meat and spices not tendered by Ajinomoto, making them a remake of the infamous MSG signature producer. Taking into account the problem that may arise in the product’s situation, here is the Research Paper entitled “MONOPOLIES AGAINST INDIRECT COMPETITOR” in partial fulfilment of the requirements of ECON ____. For the progress in the field of the topic, for the presentation of new knowledge and information, and for the challenge to future researchers in the same problem are all these raised unto.

The Researchers

B. Theoretical Framework
Pure monopoly has been defined as: “A monopoly in which there is only one seller, there are no substitutes for a product or service, getting into and out of the market is difficult, and there is almost complete control over prices” by Mcconnell. Consequently, according to him, monopoly power is the ability to control price and/or market share. In microeconomics, the theory of consumer choice relates preferences (for the consumption of both goods and services) to consumption expenditures; ultimately, this relationship between preferences and consumption expenditures is used to relate preferences to consumer demand. The following are some of the factors that are deemed to affect the demand of consumers on a certain product in general: income, consumer preferences, price of related goods, availability of closely related goods, and advertisement or popularity. According to the researches done in the USA, when it comes to products that are directly consumable, specifically those products that are under the umbrella of edibles, certain important factors are being considered by many consumers. These factors relate to matters...
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