The competitive nature of the big supermarket chains in the UK - Essay Example

It will further discuss whether the market structure is beneficial or has a negative impact to the customers. The four brands take more than seventy-five percent of the market shares with Tesco enjoying the largest share of the UK market. The supply of commodities is always on demand; hence, the production scale tends to be large to have space to accommodate the economies of scale. When the issue of economies of scale comes into play, the variable cost is always low due to the advanced technology that results to full utilization of the investment.

The consumers get more products at lower prices. The oligopoly market structure tends to attract large manufacturers. In addition, the manufacturers are required to have higher levels of technical and financial strength in production of commodities (Obitz, 2009, p. 59). It results to more benefits to the people as evident in the large quantities of low price products. The oligopoly market in United Kingdom supermarket chains does possess an aspect of interdependence. If a company makes a price or market strategy that has influence on the other companies, the whole market particularly the firms, become interdependent (Leahy & Neary, 2010, p. 25). This means that if one supermarket decreases or increases the price of its commodities, the other supermarkets will also adjust their price.

The supermarkets, in most instances have a common agreement of how they make changes on the output and the price. In addition, most of their strategies seem to be similar in order to maximize on their profits. This results to a non-price competition in oligopoly market and price rigidity. The supermarkets in the UK avoid engaging in price wars. The prices are relatively same in all the large supermarkets. In the business world, some firms will tend to lower their price than the others while the quality of their goods is not securitized.

This makes the consumers buy the products at low prices and