AQA ECONOMICS GCSE UNIT 12: Impact of Market Dominance on Consumers

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AQA ECONOMICS GCSE UNIT 12: Impact of Market Dominance on Consumers

Advantages

  • Cheaper Prices --> Due to economies of scale, the larger the firm the cheaper the prices due to mass production (which is more efficient than producing products in other ways used by smaller firms)
  • Product Innovation --> Depending on the market there can still be competition in the market, therefore product innovation will help attract consumers to individual firms (e.g Apple) and is beneficial to consumers as it creates a variety of products

Disadvantages

  • Higher Prices --> Dominant firms may also charge higher prices as it will increase their profit margin. They can do this because due to lack of competition there are less substitutes in the market
  • Lack of Choice --> This is because due to the lack of competition in the market, there will be less choice as there won't be any substitutes available in the market

Evaluation

Overall, due to market dominance consumers mainly be worse off, This is because if a firm knows they have dominance over a market, and know there is consumer demand, they will increase prices to improve their profit margin and due to the lack of choice and substitutes, consumers are forced into continuously paying the high prices. This means that with the same amount of money, consumers will be able to buy less than they used to. 

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