The paper "Monopoly in Decision-Making by the Duopoly Stores of Coles and Woolworths " is a perfect example of a micro and macroeconomic case study. Woolworths and Coles are the two largest grocery stores in Australia. The two chain stores form a duopoly of supermarkets with approximately 80% share of the Australian market. Since the establishment of Woolworths in 1924, it has given birth to more branches across Australia and claimed the cheapest prices in comparison to many stores (Coles Media Release, 2012). Coles and Woolworths had established ground in as a household name in New Zealand and Australia.
As a result, consumer interest has substantially expanded hence claiming more money back. In particular, Coles has established about 741 stores with close to 100,000 employees. Some of the services offered by Coles include smart buy, mid-price line, green choice, Coles finest, and mix-clothing. Conversely, Woolworths also has four levels of generic label products; Woolworths home brand, fresh, select and macro wholesale market. Main issues Monopoly in decision making by the Duopoly Supermarkets The duopoly stores of Coles and Woolworths own approximately 80% of the total market share in Australia thus can easily influence the consumer's purchasing and supply behaviour (Coles Media Release, 2012).
They have reduced the price of milk without considering its effects on the market both to the competitors and suppliers. The processors of milk who pose as the middlemen between the dairy farmers and supermarkets are overseas-owned hence can misuse their powers to reduce the price paid to the farmers as well as the selling price to the supermarkets. Moreover, farmers are also in control of the unprocessed milk hence increased the gate prices. The decrease in milk supply in Western Australia The reduction in prices of milk and other related products by the Coles and Woolworths has drastically reduced the supply of unprocessed milk by the dairy farmers to the market.
The dairy farmers are at a state of reconsidering their stance on whether to continue supplying milk. As a result of the price reduction, many farmers have started to change from dairy to beef production since the meat price is comparably profitable (Dollery, 2012).
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Eckersley, N. (2011) 'Coles leads slash in milk prices; farmers fear', 27 January.
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Woolworths regrets milk price war (2011). Radio program, ABC Radio, Sydney, 28 February.