The paper "Competition and Prices Policy" is a wonderful example of an assignment on macro and microeconomics. The retail grocery market in Australia is not perfectly competitive. It is very hard for industries to satisfy perfectly competitive market requirements in the world we live in. Many market structures are monopolistic or oligopoly in nature. Perfect competition explains markets that the suppliers are not large to take control of the market in a way that they can set prices of the non-differentiated products. The competition and commission in Australia estimation that Coles and Woolworths accounted for about 70% of packaged grocery sales and 50% of fresh food product sales, implies that these retail groceries are dominant in the market.
Therefore the market is not a perfect one (MU: IAER 56). In perfect competition, it is believed that all consumers and producers need to have perfect information about the commodity's quality and prices. For the Australia grocery market, this is not the case, the prices of the goods keep on increasing because the retail groceries are large and can easily set the prices of their goods.
The products in the perfectly competitive market need to be homogeneous. the product characteristics need to be the same across all supplies. In the Australia grocery sector, the products are differentiated, it has packaged products and fresh food products. Its market is not a perfectly competitive one. According to (M. U: IAER 103), a perfect competitive market is characterized by many buyers and sellers who are willing and able to buy and sell the products at a given price. In the Australian grocery sector, there has been criticism about the rising prices of their goods.
The buyers are not happy with the market prices implying that many buyers are not willing and able to buy the commodities. The market, therefore, is not a perfectly competitive one. In a perfectly competitive market the price of the commodity is equivalent to the firm marginal cost, buyers are charged a fair price. This is not what the Australian grocery market is experiencing. The market is criticized by rising prices of commodities, a clear indication that the market is not a perfectly competitive one.
University of Melbourne. Institute of Applied Economic Research (M.U.: IAER). The Australian economic review, Volume 37. The Institute, 2004.
Reynolds Jonathan and Cuthbertson Christine. Retail strategy: the view from the bridge. Butterworth-Heinemann, 2004.
Nieuwenhuysen J. P. Neville R. Norman. Australian competition and prices policy: trade practices, tariffs, and prices justification Taylor & Francis, 1976.