market structures application

Question 1

UK monopoly news

Answer 1

Digital Markets Regulation: The Digital Markets, Competition and Consumers Act 2024, effective from January 1, 2025, grants the Competition and Markets Authority (CMA) enhanced powers to regulate firms with Strategic Market Status (SMS). This includes companies with significant control over digital markets, ensuring they don’t exploit their dominant positions to the detriment of consumers and competitors.

Investigation into Apple and Google: In January 2025, the CMA launched investigations into Apple and Google’s mobile platforms. The focus is on their operating systems, app stores, and browsers to determine if their market dominance harms consumers and businesses

Question 2

natural monopoly notes

Answer 2

Transport for London (TfL): As the primary provider of public transportation in the capital, TfL operates as a natural monopoly. While there haven’t been specific recent news articles detailing changes to TfL’s structure or operations, the organization continues to face financial challenges, especially in the wake of reduced ridership due to the pandemic. Discussions around funding, fare adjustments, and service provisions remain pertinent to its monopoly status.

Question 3

natural monopolies price caps application

Answer 3

1. Ofgem Price Cap (UK Energy Market)
   - Who it applies to: Energy suppliers like British Gas, E.ON, EDF, Octopus.
   - What it does: Sets a price cap on the maximum amount households can be charged per unit of energy and daily standing charges.
2. 3. Water Industry Price Cap (Ofwat)
      Who it applies to: Private water and sewage companies like Thames Water, Severn Trent, United Utilities.
      - Regulator: Ofwat (Water Services Regulation Authority)
      - What it does: Sets a price cap for a five-year period (e.g., PR19 covered 2020–2025).
3. Royal Mail – Price Cap on Second Class Letters
   Who it applies to: Royal Mail
   letter delivery service.
   - Regulator: Ofcom
   - What it does: Sets a price cap on the cost of a Second Class stamp.

Question 4

monopoly power application points

Answer 4

1. Amazon in the UK Retail Market
   - Amazon holds significant monopoly power in the online retail market in the UK, with a large share of the e-commerce sector.
   - Amazon has a market share of around 30% of the UK e-commerce market as of 2023.
2. National Grid (UK Energy Market)
   - The National Grid Electricity System Operator (ESO) holds monopoly power in the UK electricity transmission network, as it controls the infrastructure required to deliver electricity to most areas of the UK.
   - The National Grid operates virtually all of the UK’s transmission system.
3. Google in the Search Engine Market
   - Google holds substantial monopoly power in the global search engine market.
   - Google controls around 92% of the global search engine market as of 2023.
4. British Airways in the UK Air Travel Market
   - British Airways (BA) holds significant monopoly power in certain routes within the UK and internationally, particularly in business class flights and London Heathrow Airport routes.
   - British Airways has a market share of 40-50% on key UK domestic and international routes.
5. Vodafone in the UK Telecom Market
   - Vodafone, alongside other major telecoms like EE and O2, holds significant monopoly power in the UK mobile telecoms market.
   - Vodafone has a 25-30% market share in the UK mobile telecom sector.

Application: Vodafone can influence prices, especially in the mobile data and calling plans. Although there is competition, the market is dominated by a few large players, making it difficult for smaller firms to challenge the incumbents.

Impact: Vodafone can sometimes charge higher prices for mobile services, with customers having limited choice in certain areas where smaller competitors are not as prevalent. Additionally, Vodafone can set terms on its infrastructure to limit competition from virtual network operators.

Question 5

CMA investigation application

Answer 5

Investigation into Amazon’s Marketplace Practices (2022–2023):

• Timeline: Launched on 5 July 2022 and concluded on 3 November 2023.​
• The CMA examined Amazon’s use of non-public third-party seller data, its criteria for selecting products in the ‘Buy Box,’ and the process for listing products under Amazon’s ‘Prime’ label.​

Investigation into Amazon’s Investment in AI Startup Anthropic (2024):
- Launched on 8 August 2024 and concluded on 27 September 2024.​

Investigation into Amazon’s Cloud Services Practices (2025):
- Timeline: Ongoing as of early 2025.​

Question 6

monopolies

Answer 6

Thames Water: Operates in a natural monopoly structure

Question 7

oligopoly

Answer 7

UK Supermarkets: Tesco (~27%), Sainsbury’s (~15%), Asda (~14%), Morrisons (~9%) – classic 4-firm concentration ratio >65%

Price wars: Tesco’s Aldi Price Match → non-price competition

Collusion risk: CMA fined drug firms over NHS overcharging (Hydrocortisone case, 2022)

Question 8

Monopolistic Competition

Answer 8

Hair & Nail Salons: Tons of local firms, differentiated by style, quality, branding

Street Food Markets: Borough Market stalls — each offering unique food/products

Question 9

Monopsony

Answer 9

NHS: Single largest buyer of healthcare labour in the UK – monopsony in labour market

Supermarkets: Tesco/Sainsbury’s have buyer power over farmers/suppliers

Amazon: Large buyer of logistics services and some wholesale products

🔍 Key Application:
Wage suppression risk: NHS may offer lower wages due to monopsony power

Supplier exploitation: Supermarkets accused of paying farmers unsustainable prices