Competitiveness in Markets
A competitive market means that there are a large number of producers within the market and are all competing to make profit by selling their goods and services to a large number of consumers. In competitive markets, firms are 'price-takers' meaning that they have limited marketing power (influence of the market price) as the relative supply and demand of the market sets the equilibrium price for goods. Furthermore, due to the large number of sellers, goods are usually very similar between firms and brands. This is known as homogenous products, an example of these goods is McDonald's 'Big Mac' burger and Hungry Jack's 'Big Jack' burger. Lastly, the final feature of competitive markets is how easily they are to access, with limited barriers to enter or exit the market. There are many examples of competitive markets, for instance, fast foods chains or electronics markets.
Non-competitive markets, also known as imperfect markets, are characterised by the limited levels of producers with a lot of market power and the ability to control price levels in a market. Key features of this market include, the differentiations in products and the restricted entry new firms experience when trying to gain access to the market. These features make products look unique to a certain brand, allowing firms to raise the prices, as well as, make it difficult for competitors to enter the market with new products. There many examples in Australia of imperfect markets. Notably Woolworths and Coles, before Aldi was introduced, were almost the only large grocery chains in Australia. As there was limited competitors or alternatives, Woolies and Coles had the market power to set prices extremely high in order to receive large profits.
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An example of an extremely uncompetitive market is known as a monopoly. This market type exists when there is only one producer of a certain product which enables the firm to raise the prices and gain high levels of market power, as there is no alternatives for buyers to access the goods. An example of a natural monopoly in Western Australia is Western Power. As it is the government's and the ACCC's duty to protect consumers against monopoly powers, Western Power is an exception to this policy as it is necessary to have powerlines under the same company to ensure continuity between systems and wires. However, Western Power is under restriction and supervision to ensure consumers are not exploited, otherwise, this would be an extremely dangerous situation for consumers.