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Economics/Collusion
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Question
Hi,
I'm a 3rd year honours university student and would like to ask, relating to the UK supermarket industry, can yo suggest any measures to enhance competition? Just some guidelines will do, other parts of the question refer to the extent how the largest companies compete and how collusion may be facilitated. But, i'm unsure about that part i've adsked.
Thank you!
Hi, Amy--
I see that honors economics class is still zeroed in on the U.K. supermarket industry. Here's a link to a question I answered several days from one of your colleagues who said her name is Aisha: http://en.allexperts.com/q/Economics-2301/2009/10/oligopoly.htm I think I put some links in my response that you might find helpful.
Collusion is awfully easy to facilitate. All it takes is a small group of sellers that recognize their interdependence. That is, contrary to the nutty assumption of perfect competition that the actions of any one competitor have no impact on the actions of or fortunes of either the industry or any other players, rivals in an oligopoly CAN affect one another's fortunes. They recognize that and act accordingly, at least most of the time.
The collusion that can occur--my favorite example is the RTE (ready-to-eat) breakfast cereal industry--is a no-brainer. The collusion isn't overt - that would be illegal. But players in an oligopoly, like members of a family, know what is acceptable behavior and what isn't. It's unspoken, but everyone knows--in the family and in the oligopoly.
If you search AllExperts.com on the word OLIGOPOLY, you'll get a number of hits. I have made additional comments about oligopolies that you're likely to find helpful.
Please do me a favor by completing the rate-the-expert e-mail you'll receive about the same time you get this reply from me. Your ratings and, especially, your comments help me do a better job of helping folks like you who ask such interesting questions!
Take care, and thanks.
Warren
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Warren D. Miller, CFA, CPA, ASA
Expertise
My expertise in economics is limited to three sub-disciplines: Austrian economics, industrial organization, and evolutionary economics. Questions dealing with macroeconomics and other sub-disciplines of the subject should be submitted to those who have the appropriate expertise. N.B.: I DO NOT ANSWER QUESTIONS MARKED 'PRIVATE' because I believe that knowledge should not be hoarded. I also believe that such questions are likely to come those trying to cheat. Also, as one who was a full-time academic for half a decade, I can recognize test/homework questions several time zones away. Do not demean yourself by submitting such questions to me. Those who do so are cheating; I WILL call you out publicly. I have a zero-tolerance policy for cheating and dishonesty. In addition, please don't emulate the businessman who posted a request for help in August 2008. He expressly denied that he was seeking "investment advice" and said that his query was for, and I quote, "educational and informational purposes." Later, he allowed as how his questions related to the possible purchase of a $500K piece of equipment. I said I thought he had misrepresented himself. Bottom line: high-end business consulting is how I make my living. I am the sole support for my family. Please respect that fact and don't try to get for free what our clients pay for. If your company is big enough to have a sophisticated problem, it can afford to pay for the expert advice we and others provide. Beckmill Research, LLC, is a 95-octane firm. We're small, but we've been at this for nearly 20 years. We know what we're doing. Segue: Early on, some asked me for career advice; I gave it. I now get many such requests. The demand for a valuable good that is free is unlimited, so I now charge for that advice. Email me: cfa2005@gmail.com. Finally, PLEASE DO NOT ASK FOR INVESTMENT ADVICE. I am not licensed to provide such advice. If you want such counsel, talk to your financial planner or other financial adviser.
Experience
I work with Austrian economics (which differs in major respects from the traditional economics), industrial organization (which is about industry structure, conduct, and performance), and evolutionary economics (almost, but not quite, the economic analog of its biological counterpart) every day in my work. I appraise closely-held businesses, provide exit-planning services, and offer high-level strategic analysis, advice, and solutions to CEOs and owners of mid-sized businesses. Understanding, applying, and writing about these disciplines is an essential part of how I have made my living since 1993.
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CFA Institute, Strategic Management Society, American Society of Appraisers, Academy of Management, Culver Legion, National Association of Scholars.
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CFA Magazine, Strategic Finance, Valuation Strategies, Journal of Advanced Property Economics, Harvard Business Review, American Fly Fisher, CFA Digest, CPA Expert, Business Valuation Review, among others
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Chartered Financial Analyst designation (2006);
Accredited Senior Appraiser in Business Valuation (2006);
Certified Public Accountant (1992);
MBA - Oklahoma State University (1991);
Completed all of my Ph.D. coursework in strategic management - Oklahoma State University (1983-87);
BBA in finance and accounting - U. of Oklahoma (1975)
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Business Valuation Volunteer of the Year (2001) - American Institute of CPAs;
Winner - Oklahoma Humorous-Speaking Contest - Toastmasters International (1971)
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