Assignment 3 assesses students’ understanding of the concept of market failure and allows them to critically evaluate the involvement of the public sector in minimising the adverse effects of market failure to society.
In groups of 3 students you are expected to choose one of the following Australia’s industries: energy market, dairy industry, housing market, grocery retailing and private health insurance. Prepare a 2 000 word research report which addresses the following:
(a) Critically evaluate the industry that you have chosen and suggest with reasonable justification the market structure it belongs to. The market structures discussed in class are perfect competition, monopoly, monopolistic competition and oligopoly.
(b) The perfectly competitive model which presents the price system as a basis for efficient allocation of resources in economies has been found not to work resulting in producing a phenomenon referred to as “market failure”. With reference to the industry you have selected, review it and identify characteristics of market failure from economic theory that are relevant to that industry.
(c) Specifically highlight and discuss the undesirable consequences to society as a result of market failure in the selected industry. Do not generalize, be specific.
(d) Critically evaluate what the government or quasi – government sector has done to address the negative effects of market failure that you discussed in (c) above.
(e) Comment on whether you agree or not with the statement, “market failure only occurs in developing economies and not in developed economies”
(f) Content Audience and Purpose
(g) Critical reasoning, presentation and defence of an argument and/or position
(h) Analysis and Application with synthesis of new knowledge
(i) Use of academic conventions and sources of evidence
(j) Effective communication
(k) Peer Review
These solutions may offer step-by-step problem-solving explanations or good writing examples that include modern styles of formatting and construction of bibliographies out of text citations and references. Students may use these solutions for personal skill-building and practice. Unethical use is strictly forbidden.Table of contents:
Table of contents: 1
Grocery Retail industry in Australia: 2
Market Failure in grocery retailing: 4
Undesirable consequences to the society due to market failure in grocery retail market 6
Governmental regulations for market failure in grocery retail 7
Market failure pertains to both developing economies and developed countries: 8
In this business report, the analysis is about the grocery Retail Industry in Australia and how the oligopolistic market structure of the industry has generated a market failure in the industry. the government Regulation and the code of conduct created for the retail supermarkets has also been discussed. and the final section details about whether the market failure is occurring only in developing economies and not in the developed ones.
Grocery Retail industry in Australia:
Grocery Retail Industry in Australia consists of very few supermarkets dominating the industry namely Coles and Woolworths, and since the last decade, Aldi and Costco have joined the industry. Since there are very few players in the market of grocery retail, it fits aptly into the oligopolistic market structure the characteristics of which are discussed below:
Oligopoly like that of grocery Retail Industry in Australia is a market structure where only a few firms dominate in the market. When such a situation of a few firms dominating the market occurs, there tends to be a high concentration in the market. In the grocery retail industry of Australia, before Aldi and Costco entered the market, the industry was dominated only by Coles and Woolworths. The Key characteristics of the oligopolistic market structure are that the firms in the industry are interdependent and generally cannot act independently without taking into consideration the actions and reactions of the other firms in the market. for example, Coles has to take into consideration the potential reaction of its closest Rivals like Aldi, Costco and Woolworths before making its own decisions. the understanding of prisoner's dilemma and...
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