3.4-5 Market Structures; Labour Market Flashcards
(18 cards)
what is the NMW for 18-20 year olds (between 2024-2025) + what is the % change
£8.60 (2024)
£10.00 (2025)
% change = 16.3% increase
example of a monopsony in the labour market and why is this the case
NHS -> dominant employer of nurses + doctors (UK) -> large market power -> can set wages + employment conditions
- junior doctors paid too little -> forced to accept lower wages as NHS is the only employer
example of a monopoly in the labour market (i.e. trade unions)
- BMA (British Medical Association) -> collective bargaining power to negotiate wages + working conditions for doctors e.g. resident doctors voted to accept a 4% pay rise; 95% of Northern Ireland members agreed to this deal.
- National Union of Teachers (NUT) -> (2014) - voted against schools using teachers who do not have formal teaching qualifications; 450K members -> they’re called the NEU now (National Education Union)
for teachers, approx. 450K members in UK e.g. strike over wanting more funding for ‘non-academised sixth form colleges’
what are some examples of monopolies inside + outside of the UK (give a rough estimate of their market shares)
- Royal Mail (Postal Services Act 2011) -> delivers letters; USED to be a natural monopoly but experienced privatisation
- Google - global search market; 89.7% market share
- Amazon - E-commerce; 37%
- Facebook - social media platform (35%)
what are some examples of **NATURAL ** monopolies inside + outside of the UK
- Thames Water - responsible for water supply + sewage treatment
- National Grid - operates electricity transmission
- Network Rail - UK rail infrastructure -> manages tracks + stations across UK
what are some examples of firms inside + outside the UK that have undergone a successful merger (can specify dates of the merger)
CONGLOMERATE:
- Microsoft + Linkedin (2016) -> $26.2 bn: Microsoft engages in technology + software; Linkedin is a professional social media platform. Allowed Microsoft to expand into this field.
HORIZONTAL:
- Disney + 21st Century Fox (2019) -> $71.3 bn: both companies engage in entertainment + media production -> increased market share; great control over streaming services.
FORWARD VERTICAL:
- Amazon + Whole Foods (2017) -> $13.7 bn -> online retailer (Amazon) acquired a grocery retailer (WF) -> helped Amazon expand into physical retail (growth of brick-and-mortar stores) -> development of Amazon Fresh
BACKWARD VERTICAL:
- McDonald’s + its suppliers e.g. meat processing plants, logistics -> improves quality of ingredients -> reduced intermediary costs -> imrpvoed efficiency
what are some examples of mergers that have been blocked/undone (specify dates + why this occurred)
- Sainsbury’s & Asda (2019) -> CMA blocked it as competition would be eliminated
- O2 & Three (2016) -> European Commission (EC) blocked it for the same reason
give examples of instances where a firm had to change their business objectives
- McDonald’s (2010s): sales (by expanding globally, 1400 restaurants in UK) -> satisficing (offering healthier menu options + being more sustainable)
- Tesla (2017): shifted from a niche electric cars market to sales max -> produced more affordable card + moved towards a broader market
- M&S (2000s): shift to satsificing as they were losing to competitors -> cost-cutting measures
give examples of cartels
OPEC (Organisation of the Petroleum Exporting Countries)
- coordination oil production + prices -> controls 40% of global oil supply (e.g. Saudi Arabia, UAE, Russia, etc)
.- 2022: cut oil production to keep prices high -> increased revenue = more profits
- reduces competition -> may lead to geopolitical tensions
give examples of firms that have undergone tacit collusion
- Coca-Cola & Pepsi -> match each other’s pricing strategies + promotional campaigns
- Starbuck’s & Costa
give examples of firms that have undergone overt collusion
BRITISH AIRWAYS & VIRGIN ATLANTIC (2004-2006)
- fized fuel surchages on long-haul air cargo shipments -> coordinated prices increases -> harming consumers + businesses relying on air freight
- 2006 -> Virgin Atlantic whistle-blew under a leniency program (where firms that engage in a cartel can be fully/partially pardoned if they admit to their wrongdoings)
- BA fined £58 mill
examples of monopsonies inside + outside of the UK
- SUPERMARKETS e.g. Tesco, Sainbury’s, Asda
- NHS -> power over setting wages + working conditions
- Amazon, Walmart
example of when monopsony used its price setting power to get lower prices (suppliers and employees)
TESCO (2014)
- Tesco delayed payments to suppliers + demanded extra payments to maintain shelf space -> GCA announced they had breached Code of Conduct but could not levy fine
- Scandal led to stricter regulations - GCA can fine firms up to 1% of annual revenue
examples of oligopolies inside and outside of the UK
SUPERMARKETS
- Tesco, Sainsbury’s, Asda, Morrisons -> 54% (combined)
COFFEE SHOP RETAIL
- Starbuck’s Costa, Caffe Nero
examples of businesses in monopolistically competitive markets
clothing retailers (Primark, H&M); restaurants (Pret a Manger)
example of businesses in (near) perfectly competitive markets
fruit markets, online marketplaces
mean gender pay gap 2024 (what is the change)
7% and fell by 8%
example of a firm/industry that has become more contestable overtime + say why
UK TAXI INDUSTRY:
- technological changes e.g. rise of mobile phones + GPS -> lowered barriers of entry for firms like Uber toenter without needing expensive licenses
- traditional taxi firms had high sunk costs (e.g. expensive taxi licenses, specialised black cars); whilst Uber does not require this; they can drive their own cars -> allows ‘hit-and-run competition’
- regulatory changes -> more competition
- changing consumer preferences = less loyalty to traditional taxi firms -> consumers prefer app-based services (cheaper, convenient + faster)
- increased threat of new competition e.g. Bolt, FreeNow
