In the UK, oligopolistic market structure emerged in 1980s and 1990s when the largest four supermarket chains (including Tesco, Asda and Sainsbury) opened close to of their new stores, increasing their market share from under 20% to over 60%. By late 1990s, consumers started to complain near largest supermarkets taking advantage of their market power, which started to attract UK competition regime to carry out further investigation. It was investigated that there is monopsony power arising mingled with supermarkets and suppliers. Because of such a huge market power, supermarkets were able to escort over the prices of fresh produce supplied by the farmers.
As seen in the graph above, the research shows that the UKs supermarket industry became even more(prenominal) heavily dominated by four largest supermarket chains this brings their full(a) market share of up to 75.6%. These four market leading tend to have higher proportion of own judge products, more stores, better and more efficient online shopping facilities.
wiz of the major, and most innovative, areas of change has been the development and investment in a whole new schema of distribution, largely replacing in large quantities markets, undertaken by the major supermarkets.
Each of them now has about 20 regional distribution centres, either in-house or contracted out, with modernistic IT systems and developed logistics. In terms of product range, service, speed, freshness and persona this new system has little to compare directly with the system it has replaced.
2.0 Consumer Welfare
As discussed earlier, the supermarket industry consists of four major supermarkets which add up to 75.6% of an industry. As Jeffrey M. Perloff states in the book of Microeconomics (5th ed.) that the consumer welfare is maximised by having a competitive market. This can be explained by equation W=CS+PS, whereas W is welfare, CS- consumer surplus and PS-producer surplus. However, oligopolistic market structure...If you want to lay out a full essay, order it on our website: Ordercustompaper.com
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