In economics, there are four kinds of market structure: Monopoly, Oligopoly, Monopolistic Competition and Perfect Competition. In addition to this there are three major stakeholders involved in this kind of market: Buyers, Sellers and the Government. The buyers and sellers would like to have a preferred Market Structure over the other; however, both of them do not have the same preference. The preference of one is the dislike of the other. However, this should mean that a preference of the said market structure should also ensure that all stakeholders, including the government, should not take advantage of the situation for their personal goals.
Sellers' Dream Market Structure: Monopoly & Oligopoly
As one of the laws of Economics would tell us, the fewer the supply, the more demand would there be, which would eventually lead to higher pricing of goods and services. Personally, I think this is the ideal view of every business person, to be in a position wherein they could control the price on their free will. Aside from having the price control, they also have the control on the manner they handle the service and/or the quality level of products they are selling to their customers. Not only these things that this kind of structure would do, they also could envision the goal of maximizing profits in which when they felt that the demand seemed to be low, they can have the tendency to cut production in order to spike the demand artificially. However the question is, how much is too much? Perhaps a price may be said to be justifiable for one, but not justifiable for others.
An ethical businessperson would ensure that the price would be just for all the markets involved even if they are the only one who are providing them. But then, even if they think that it is just, a consumer's mind would think that the said firm is still cheating since they do not have a comparison of the said product. On the other hand, an unethical firm would likely to take advantage of the situation as they knew that they are the only ones who they can be depended upon by the consumers.
Examples of these are the ones that been told by the elderly which are the utility companies such as Meralco and PLDT wherein they've been told to us that before the service is next to horrible in which it would take these firms a long time before a service is being rendered. In addition, I think this still applies until now. Despite PLDT having competitors, the prices is still expensive compared with other countries wherein the market competition there was so intense to the point that they are already having price wars and revealing the competitor's name through their advertisements. Aside from the consumers not having any choice but to swallow the high price of the products and services, firms are trying to find ways to ensure that the government would not allow any form of entry from other countries stating reasons such as foreigners might take over the country in which the consumers would be taken advantage of eventually. I personally think that they knew that once these established foreign companies would get in the market, not only they could not compete in terms of the price, they might not also compete in terms of quality of products and services. The masses knew how much of a threat foreign companies are, that is why the existing firms that are under oligopoly would really stop it from happening.
I think this is where the government should interfere in a justifiable manner. While it is true that an invasion of foreign firms would really make the Philippine market suffer to a certain degree to a point that all of our products and services would eventually become a foreign-based instead of local. I agree with the government's rule that a corporation should entail at least 60% of ownership from locals in order for the foreigners to dominate the country. However, government should become fair and just in terms of not accepting bribes from the Oligopoly companies for the good of the countrymen. Masses would like to know the truth. The fact that these masses entrust themselves to the government, the government should do their part in ensuring that the interest of the masses are protected. With government interference such as regulating the price of the products and services of the firms involved in this market structure, the company that is following ethical principles would not be accused of cheating the masses as they know that their prices is being regulated by the government. In addition, by consistently providing the needed products and services by the consumers, they would not be questioned by the buyers.
Reality: Combination of All Market Structures
We cannot put blame into something that utility companies are usually labeled as either Oligopoly or Monopoly and the rest of companies being in monopolistic competition in which it is so intense among competitors. I think that is why government should interfere in the firms that belonged into either Oligopoly or Monopoly to ensure that the consumers are getting what they deserve.
The ideal world for all stakeholders involved would be the perfect competition. This is where there are a lot of buyers and sellers. Also, consumers can substitute a good whenever they felt the quality fell short or become expensive. Aside that the buyers benefit from it, sellers can also benefit in this kind of structure even if it meant that there are a lot of them competing with others. If this structure would be compared to a monopolistic competition, they would fare much better as they can still have decent profit without losing their economic profit by having a healthy market share.
Sadly, the world is not perfect. There is not a single example that exemplify a perfect competition. The nearest it can be compared to is an agriculture. However, by ensuring that firms are honest and truthful in terms of selling their products and services, the buyers would not feel that they are being cheated; at the same time, the government would not spend a lot of their time investigating pertaining to the cheating manner that firms have been accused of. By following all their respective principles in a positive manner, the world will be a perfect place. Pure competition may not exist, but by ensuring that there is a fair treatment among all stakeholders involved, this will be a better place to live in.
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