Contents

• Introduction 2
• Microeconomics 2
• Oligopoly 3
• Analysis of the Grocery Market in Australia 3
• Australian Grocery Market: A Competition Perspective 3
• Workable Competition and Australian Grocery Market 5
• Vertical Integration 7
• Backward vertical integration 8
• Forward vertical integration 8
• Balanced vertical integration 8
• Conclusion 9
• References 10

Description

Perfect competition has been a topic of debate in the global arena. Perfect competition is a concept in which a market is not dominated by a few firms or companies and there is equal opportunity to all the companies with out room for cost leadership, entry to barrier, firm colluding, etc that affects the open market (Machovec, 1995). But over the years experts have concluded that the perfect competition does not exist on the real world. No market can be perfectly competitive. Markets are usually a monopoly or oligopoly where in the market is controlled by a single or a few companies. In such a scenario proposals of a workable competition has been made. This was done to make the competition workable rather than perfectly competitive.
The prime example of market domination is the Australian grocery market where the market is dominated by two companies. This has led to rise of prices of goods in the past couple of years and has come under a lot of criticism. The following report analyses the market conditions in the Australian grocery industry by applying microeconomics principles. The author also discusses the relevancy of the concept of workable competition in such a market and implications of vertical integration on the competitors in the industry.