Question

Private tuition centres are a big industry in Singapore with over 500 such centres that reportedly serve more than 95% of all college students. Tuition fees can be high and some families pay more than $3000 a month to send their children to private tuition. Using the theory and models of market structure, examine this industry. Should government be worried about any aspect of how an industry with this particular market structure will perform?

Answer 1

Private tuition centres is indeed a big industry in Singapore.

The services offered by different private tuition centres are also more or less identical as well as tuition fees charged by them. Therefore, I believe we can consider this industry as close to monopolistic competition.

A market structure is said to be operating under monopolistic competition when there are large number of buyers and sellers and the products sold or services offered are identical at identical prices.

As we know, this industry is operating because there is demand for it. Therefore, government shouldn't be worried about it.

All that the government can do is regulate the market for private tuition centres. For those students who can not afford paying such high fees, government may provide credit facility at a very low interest rate or the government may also contribute to their tuition fees to lower their burden in the form of cash transfer.