Economics for Business Assignment Essay Example | Topics and Well Written Essays - 750 words

Economics for Business Assignment - Essay Example This product differentiation gives the players in the monopolistic competition pricing power (A.Koutsoyiannis, 2010). The ACCC chairman Graeme Samuel believes that the fuel market is characterized by a comfortable oligopoly. I agree with Mr. Samuel’s opinion. At the retail stage of the fuel market, Woolworths and Wesfarmers Coals each have 22% of the market share. BP has 19%. Caltex has 16% and Exxon-Mobil has 6%. This totals to 85% of the total market share. Therefore these five players definitely dominate the industry at the retail stage. The situation at the refining stage is also similar with Caltex supplying as much as 55% of the wholesale supply in some states like New South Wales. The oligopolistic structure in the fuel industry in Australia arises from the barriers to entry because of intensive capital and technological requirements for operating in the industry. 2) The Australian Competition and Consumer Commission is the competition regulator of Australia. The ACCC promotes competition and fair trade in the Australian marketplace to benefit consumers, business and the community ( ACCC, 2011). In the year 2007, the ACCC undertook a detailed investigation in the Australian fuel industry to determine if there was ‘collusive oligopoly’ marked by price-fixing. The investigation found no â€Å"obvious† investigation of price-fixing, but it said that there were operational concerns because of the oligopolistic nature of the industry (ACCC, 2011). The ACCC opposed the acquisition by Caltex on the ground that it would substantially lessen competition across a range of fuel markets in Australia. The ACCC believed that this acquisition would have an adverse impact on competition in the petrol, diesel and automotive LPG markets. During a six month investigation of the proposed deal the ACCC identified 53 Mobil sites that, if they were acquired by Caltex, would result in