Oligopolistic Dublin Market Case Study

For a company wishing to enter this oligopolistic Dublin market, it is important to note if any second mover advantage exists. While it would have to contend with attracting competitors’ customers, the new company would have the advantage of free rider effects. It would have the advantage of entering the market using the latest technological advancements available, while current operators would have the cost of altering their existing systems of operations to adapt to new technology. Disadvantages may include customers’ uncertainty about the quality of a new service provider and the costs involved in switching waste collection companies as several operate on a twelve-month contract. However, a second mover has the advantage of analysing the
The domestic waste collection industry clearly has economies of scale. For example, private companies such as City Bin and Greyhound serve a large quantity of households, mainly in the areas of Dublin City and South Dublin. This offsets the high cost of capital of operating a domestic waste collection company such as the cost of maintaining a fleet of lorries, labour and the provision of materials such as bins and bags to consumers. Economies of scale can reduce the costs of domestic waste collection because of operational efficiencies. A small domestic waste collection company servicing only a small number of households does not gain any cost advantage. There is a limit to how large a company can grow before it stops achieving economies of scale, due to increased operational complexity and inefficiencies. However, the current leading competitors in the Dublin market do not appear to be at this limit yet. Any potential entrant, in order to gain economies of scale, would need to invest significantly in a marketing campaign to promote awareness, in order to appeal to the mass market. This could entice customers back into the market and encourage switching behaviour of existing
This limited barrier to entry is an indicator that these domestic waste collection companies are operating in a relatively competitive oligopoly. Each company has little market power, and therefore little ability to influence market prices. This lack of market power allows the market to be efficient because it keeps the price and quantity at equilibrium of supply and demand (Mankiw, 2012). Each firm competes mainly on price and the selection of services provided, e.g. method of payment, either by bin volume, weight, or flat fee. The domestic waste collection company that a consumer chooses will depend not only on the consumer’s budget constraint but also on their preferences regarding the services provided. If domestic waste collection companies offer the consumer several different bundles, he chooses the bundle that best suits his needs. If the companies offer the same services, the consumer may be indifferent between the various bundles. Therefore, additional services such as payment options may attract consumers who are indifferent to various