Supermarket in Uk

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Microeconomics Essay

The supermarket industry in the UK could be described as an Oligopoly Market. Based on your research into supermarkets in the UK, discuss whether this market structure creates a situation that is more or less to the benefit of consumers. For many students studying abroad, they will go to supermarkets every week. The Supermarkets in the United Kingdom sell many different kinds of products and it is easy to find a large supermarket everywhere. There are four big and famous supermarkets in UK, Tesco, Safeway/Morrison, J Sainsbury's and Asda. (Wikipedia, 2009a) These four supermarkets have the largest market share in UK so that it makes the supermarket industry in the UK could be expressed an oligopoly Market. (Wikipedia, 2009a)When it is dominated by a few large companies; a big percentage of the market is shared by these companies; there may or may not be perfect knowledge and high barriers to entry, an oligopoly market or industry will exists. It can be argued that customers lose benefit. Oligopoly is one of the market structures. It means there are just a few companies in the market and each company is self-government. (Anderton, 2004) One example is the UK supermarket industry. Although there are many smaller companies in the market, there are four main companies (Tesco, Safeway/Morrison, J Sainsbury's and Asda).

Pricing in an oligopoly is that the firms co-operate to charge the same price and hence create a position similar to a monopoly. (tutor2u, 2007) However, it is different in the UK supermarket industry. The cost of the goods in all the supermarkets will not be almost the same, because the larger supermarkets will have lower overhead costs, (bnet, 2009) so that his four supermarkets are able to charge lower cost than the smaller ones. Besides, because of the non-price competition, it is unfair to the small companies. In the imperfectly competition, price is not the most important things. These four companies...
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