Case studies Flashcards
hotels industry example of monopolistic competition
Main firms: Whitbread Group, InterContinental Hotels Group, Travelodge, Accor SA and Marriott International, Inc
- changes due to COVID-19: rise in staycations/sustainability efforts
- mergers: Accor’s Acquisition of Movenpick Hotels (2018-2019), 482-million-euro deal
- recent exits: Park Inn by Radisson: part of rebranding to focus on Radisson Blu collection
Contestability: rise in digital platforms: Expedia/Booking.com has increased contestability
Regulation: price transparency (display total prices upfront inc charges), false claims not allowed and non-refundable bookings must be clearly stated
Specific regulation investigation: Oct 2017, CMA investigated online booking platforms due to hidden charges, search result ranking concerns
Oligopoly: Airline Industry:
Market structure:
oligopoly:
- few dominant players: Delta, American Airlines and Emirates
- high barriers to entry (Boeing 787 cost over $250 million) and differentiated services
- interdependence: pricing especially for budget airlines
Concentration:
- in US, American Airlines, Delta, and United collectively control over 60% of the domestic market share
Industry behaviour:
- limit pricing
- collusion: Fuel Surcharges scandal: 2006, British Airways and Virgin atlantic found guilty of price-fixing fuel surcharges
Parcel delivery
Key firms:
- Royal Mail group, historically dominant firm until privatisation in 2013
- rise on other parcel delivery companies: DHL Express UK, FedEx UK, Evri
Market structure:
- oligopoly
Industry behaviour:
- price leadership
- limit pricing
Regulation:
- Royal Mail’s Anti-competitive Practices (2018):
- fined £50 million for abusing dominant position attempting to prevent Whistle a competitor from entering the market
monopoly example: google
Market share: 90%
Anti-competitive practices:
- barriers to entry for competitors: controls massive user data, as well as key web infrastructure like youtube, gmail
- bought youtube (2006), waze (2013) and fitbit (2021) - reducing competition
- Google’s Android OS is pre-installed on most smartphones
Regulation:
- EU Antitrust Fine ($5B in 2018) for forcing google services on Android
- US DOJ Lawsuit (2023): accusing google of searc market monopolisation
perfect competition example: wheat farming (agricultural markets)
- many buyers/sellers
- homogeneous product : wheat
- no single farm has market power
- prices set by global supply/demand, not individual sellers
monopsony - supermarkets
- monopsonies in the supply chain
- large chains, like Tesco have significant control over prices
Merger: CMA in 2019 vetoed a £7billion merger between supermarkets Sainsbury’s and Asda - Since the deal was blocked, Aldi and Lidl have grown to have a bigger combined market share than either firm
Cinema Industry
Oligopoly:
- UK/Ireland Cineworld, Odeon and Vue accounted for almost 70% of market in 2019
