Economics (Year 11)
Market power is a term that describes the lack of competition between businesses which allows firms to influence prices. The level of influence over prices that a firm has is known as the 'degree of monopoly power.' A pure monopoly is a company that has no competitors, meaning it can raise prices without losing demand from consumers. There are very few of these present in Australia, yet Western Power is an example of a natural monopoly that is government regulated as it is important to have one provider of electricity to ensure continuity. Furthermore, another example of market power is oligopolies, which refers to a market with few dominant firms. For instance, Woolworths and Coles are dominant powers in the supermarket sector, making them an example of an oligopoly power.
In order to reduce the presence of companies with large amounts of market power, government policies are in place to ensure consumers are not at risk of abuse of market power by firms. The Australia Competition and Consumer Commission (ACCC) ensures consumer protection and regulates and monitors monopolistic powers.
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