A-Level Essay On Microeconomics Assignment 4 For Free Use

The origins of the supermarket system in the UK can be traced to 1850s. Since then the industry has been rapidly growing with the number of stores dramatically increasing. Such rapid development was largely driven by the development of marketing and featured products through refined representation, as well as evolution of advertising techniques and brand names.
The situation when the supermarket market is controlled by a small number of big operators essentially leads to the state of oligopoly with all its advantages and disadvantages. When a number of big operators controls a market, they have significant influence on the prices and ability to limit new entrants into the market. Thus, competition is slackened and operators have no incentive for development: they don’t need to monitor the quality of the products and services and introduce innovation. The main advantage of the given situation is economy of scale, when the increase in the volume of production leads to lower costs per unit.
The Competition Commission revealed a number of unfavorable factors affecting the state of the supermarket industry during its investigation in 1999. To tackle the problem the Code of Practice was introduce. However, it didn’t bring fruitful results since the Code wasn’t stringent enough to be efficient and the corresponding legislature wasn’t clear enough as well. The main problem was that the Code didn’t presuppose significant changes, so even with main supermarket chains complying to it, selling practices hasn’t changed in essence.
As the introduction of the Code of Practice proved inefficient, appropriate measures needed to be taken to solve the issues. There could have been implemented regulations that could provide for stricter rules for the supermarkets, ensuring fair pricing and competition and preventing the market from being overtaken by large supermarket chains. This would boost the growth of the industry and mitigate the sentiments of the representatives of specialist shops.