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Choose an industry that is very competitive, and one that displays signs of monopoly. Use examples to show and analyse how they pursue their objectives, and in what way they differ in their business practices.

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Introduction

Choose an industry that is very competitive, and one that displays signs of monopoly. Compare and contrast how the firms in each industry behave. Use examples to show and analyse how they pursue their objectives, and in what way they differ in their business practices. As part of my Business Economic unit, I am requested to produce a report on two industries- one that is very competitive and another that presents signs of monopoly. The industries that I have decided to use are the low-cost airlines industry which is very competitive and the railway infrastructure industry that displays monopolistic signs. In order to produce that report I will compare and contrast how firms behave in both industries and evaluate in what way firms in the two industries differ from each other. Since the liberalisation of the European?s airline market, the low-cost airlines industry has always been buoyant especially in short haul voyages. In fact, this has led to a very competitive environment especially in the UK ?where according to Keith J. Mason the industry has seen dramatic change as low-cost airlines have established and developed significant markets for their services?.[1] While investigating the low-cost airlines industry, the first thing that caught my attention was the way in which firms in this industry set their prices. ...read more.

Middle

According to the Mintel Oxygen report for July 2007 on No-frills/Low-cost Airlines - UK - July 2007 “customers in this industry are impulsive, responsive to alerts and offers”[3]. A typical example of this is Ryanair selling 3million summer seats for £10(taxes and charges included). As you know this could also increasing demand. To sum up my analyses of the low-cost airlines industry, I am going to determine what type of market it is. After analysing the market I came up with the conclusion that that Low-cost Airlines market was a contestable market as it displays the characteristics of one. In fact, in the Low-cost Airlines we have got firm like EasyJet, Ryanair, Air Berlin and many more that give the impression that the industry is very competitive so that they can keep their customers. Also in this Industry Ryanair is known as a predatory pricing company. Basically, what Ryanair does is to lower its prices until weaker new company in the industry is out of the market. Finally, one of the main barriers to exit in this market is the element of sunk cost. In a competitive market like Low-cost Airlines element of sunk cost might block entrance to new firms willing to enter the market. ...read more.

Conclusion

Therefore, it would be really difficult for a new company to penetrate the market and gain any market share. Legal forms are also barriers to entry in the Railway Infrastructure. In fact, Network Rail license granted by ORR allowed the company to be the only to operate in the industry. Conclusion This report has allowed me to have an inside on how different economic theory applies to businesses in real life. Especially, how firm in a contestable market differ from the one in a monopoly market and the factors that affect the demand in each market. Reference www.airberlin.com/ http://alpha.fdu.edu/~koppl/note19.htm http://www.bmibaby.com/bmibaby/html/en/splash.htm http://www.easyjet.com/ www.flymonarch.com/ www.ryanair.com www.wizzair.com/ Steve Margetts (2007) Revision Guru [website] available for :< 22 November 2007> http://www.revisionguru.co.uk/economics/contest.htm http://www.tutor2u.net/ Word count 1493 [1] Keith J. Mason, (2001) Marketing low-cost airline services to business travelers, Journal of Air Transport Management, 31(January), Volume 7,( 2), March 2001, pp 103-109.Avalaible from: ScienceDirect. http://www.sciencedirect.com [ Accessed 23 November 2007] [2] Mintel Group (2007) Mintel Oxygen [website] available from :< http://0-academic.mintel.com.lispac.lsbu.ac.uk/sinatra/oxygen_academic/search_results/show&/display/id=219233/display/id=288865?select_section=288864>[Accessed 20 November 21, 2007] [3] Mintel Group (2007) Mintel Oxygen [website] available from :< http://0-academic.mintel.com.lispac.lsbu.ac.uk/sinatra/oxygen_academic/search_results/show&/display/id=219233/display/id=288865?select_section=288864>[Accessed 20 November 21, 2007] [4] Marketline Global (2007) Marketline [Website] available from:< http://0-www.marketlineinfo.com.lispac.lsbu.ac.uk/library/DisplayContent.aspx?R=54D22CBC-D523-487F-BBA6 E3B97FE6CCCD&N=4294840115&selectedChapter=IDA43WKD#IDA43WKD> [Accessed 20 November 21, 2007] [5] Marketline Global (2007) Marketline [Website] available from:< http://0-www.marketlineinfo.com.lispac.lsbu.ac.uk/library/DisplayContent.aspx?R=54D22CBC-D523-487F-BBA6 E3B97FE6CCCD&N=4294840115&selectedChapter=IDA43WKD#IDA43WKD> [Accessed 20 November 21, 2007] [6] Marketline Global (2007) Marketline [Website] available from:< http://0-www.marketlineinfo.com.lispac.lsbu.ac.uk/library/DisplayContent.aspx?R=54D22CBC-D523-487F-BBA6 E3B97FE6CCCD&N=4294840115&selectedChapter=IDA43WKD#IDA43WKD> [Accessed 20 November 21, 2007] ...read more.

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