The breakdown of oligopoly Down Under
Many of the major industries in Australia are oligopolies/oligopsonies. Examples include banking, telecoms, supermarkets, insurance and iron ore. The dominant firms in these markets have been accused of exploiting their market power, both in charging high prices to consumers and driving down the prices paid to suppliers. The result, it is claimed, is that they have been making excessive profits.
But things may be changing. With the rise of online trading, barriers to entry in these markets have been falling. Many of the new entrants are established firms in other countries and hence already have economies of scale.
The first article below examines the challenge to established oligopolists in Australia.
Articles and blogs
The death of the oligopoly: Australia’s incumbents face new rivals Financial Review (Australia), Michael Smith (21/4/15)
Australian Oligopolies The Grapevine, Adam Dimech (27/12/14)
Paper
Breaking up Australia’s oligopolies Ashurst Australia (14/8/13)
Questions
- Find out which are the major firms in Australia in the five industries identified above. What is their market share and how has this been changing?
- What barriers to entry exist in each of these industries in Australia? To what extent have they been declining?
- What can new entrants do to overcome the barriers to entry?
- What technological developments allow other companies to challenge Foxtel’s pay television monopoly?
- To what extent are developments in the supermarket industry in Australia similar to those in the UK?
- To what extent does Australia benefit from increased globalisation?