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

Answer) We have to look at few factors here,first is that there are over 500 players in this industry at present which is substantial,second is that it serves more than 95% of all college students which again is substantial,this is a monopolistic competition market structure where there is differentiation but at a very small level,where firms can easily enter as can be seen with such a high number and probably difference is amongst advertising of better tuitions,so this industry seems to be an easy entry industry with negligible difference in services they are providing(else only few would have been there) and more competition is in terms of building brand,as with monopoly,cost will be high and can be increased easily.

Absolutely,Government should be worried as such an industry in monopolistic competition means that there could be huge costs for parents from every income group,add to that the fact that with so many players,quality might be compromised as differentiation becomes marketing not quality or content and with easy entry anyone can enter and costs will further increase,so this sort of arrangement is not good where more than 95% of college students attain these services.

Answer is complete.Thank you!