Question

Explain at least 5 regulations of monopolistic and oligopolistic competition and the players or parties involved in Papua New Guinea? Explain in 4 paragraphs

Answer 1

Monopolistic competition refers to an imperfect competition wherein each of the producer in the market sells products that are differentiated from one another by their brand or quality and hence do not form a substitute product to each other. Here, the firms do not take any necessary action to study the impact of its prices on the market and sometimea it may lead to a government- backed monopoly firm. An oligopolistic competition refers to a market competition where the sellers are differentiated from. Each other, but not to the extent as in a monopolistic competition. Hence, they can form substitute products of each other. In this kind of a competition, each seller hasba defined market and would be influenced by the pricing mechanism of thw other parallel market.

The monopolistic competition allows the seller to take advantage of the market and hence suitable regulations of the firm is essential to maintain the balance in the economy. The major regulations that govern a monopolistic comoetition market are

• Regulations in the pricing mechanism which puts a limit on the top prices so as to prevent them from overpricing tendencies
• Regulate the monopsony power and maintain quality of the market
• Regulation of unhealthy mergers
• Regular analysis and break up of a monopoly if necessary
• Yardstick or 'Rate of return' regulation which can put an end to unhelathy profit making activities

Similar to a monopolistic competition, an oligopolistic competitive market also needs certain regulations as follows

• Here, as only a few firms takes the hold of the market, proper regulations should be taken in expansion of a firm
• Regulations to be performed in granting market licences and profit sharing
• Regulative measures to improve the competition in the market by giving licences to more competitive firms
• Regulating the affairs like profit accumulation and prevent the market from becoming a monopoly firm
• Law making to ensure that current market behaviour is maintained

  

There are many examples of firns operating as a monopoly and oligopoly in Papua New Guinea(PNG). Digicel, a mjor telecommunication provider is an example. Although b-mobile is a comoetitor, the operations of Digicel has sidelined their operations and has remained a major partner in providing telecommunication services. The monopoly tendency is seen in the rice market with Naima rice functioning as a monopoly in this regard. This indicated that PNG is also not free from thue clutches of monopoly and oligopoly firns.