Perfect Competition vs Monopoly

Topics: Perfect competition, Economics, Monopoly Pages: 4 (1390 words) Published: November 24, 2010
M&S (perfect competition) Vs Thames Water (monopoly)

At one end is perfect competition where there are very many firms competing against each other. Every firm is so tiny in relation to the entire trade that has no power to manipulate price. It is a ‘price taker’. At the other end is monopoly, where there is just a single firm in the industry, and for this reason no competition from inside the industry.

Perfect competition e.g. Marks & Spencer, they have many competitors such as, Asda, Next and Tesco. They productively have over 600 UK stores, in addition expanding international business. They employ over 75,000 people in the UK and abroad. On the whole, their clothing and homeware sales account for 49% of their business. The other 51% of business is in food, where they put on the market everything from fresh produce and groceries, to partly-prepared meals and ready meals.

Nevertheless on the other end, there is a Monopoly e.g. Thames Water, which is UK’s largest water and wastewater, services company. They play a very important role in providing everyday 2,600 million litres of tap water to 8.5 million customers across London and the Thames Valley. They also get rid of and take care of 2,800 million litres of sewage for an area covering 13.5 million customers. The main strong point of National Grid is that there are no competitors.

Having many firms rivalling not in favour of each other e.g. Marks & Spencer, it is then good for consumers. The hypothesis of perfect competition demonstrates an intense form of free enterprise. Within it, firms are utterly issue to market forces. They have no power at all to influence the price of the product. The price they face is dogged by the interaction of demand and supply in the entire market. M&S are ‘price takers’. There are numerous firms in the industry that each one manufactures an unimportantly small quantity of entire industry supply, and consequently has no power at all to change the price of the...
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