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Analyzing Case Study - Research Paper Example
Pages 4 (1004 words)
Name Tutor Course Date Institution Analyzing Case Study Introduction The essay will discuss the energy market in European Union especially in the United Kingdom. The essay will describe the formation of the imperfect market structures such as monopolistic and oligopolistic markets with attention to gas and electricity markets…
The analysis will take into consideration the actions and decisions of the energy industry regulators to promote competition in the industry. United Kingdom Energy Markets As demonstrated by the actions of British Gas and the Scottish and Southern Energy, the energy market in U.K is characterized by collusion and cartels. These oligopolistic market structures enable the six larger firms in this industry to regulate the market by determining the prices and supply of energy products. An oligopoly is a market structure, which is controlled by few producers, and each of the producers has control over the market. The extent to which an industry or a market is dominated by a few leading firms is determined by the concentration ratio. It is an industry where the level of market concentration is high. In most circumstances, an oligopoly exists when there are five large firms, and the demand or sales of their products account for 60 percent of the total market. There is no specified theory that explains how firms determine the output and price under the conditions of oligopoly. If there are price wars in the industry the oligopolistic firms will produce and price their products as perfect competitive industry, at other times they will behave like a pure monopoly. ...
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