Research Topics: US Markets

Imperfect Competition in Some US Markets

Introduction             A perfectly competitive market is commonly characterized by having homogenous product, having the freedom of entry or exit and having a large number of buyers and sellers. According to Mankiw (1998) the perfectly competitive market possesses the following characteristics: (1) many buyers and sellers with no single economic agent influencing the exchange of goods among market participants; (2) a homogenous or standardized product which the individual producers can not alter or differentiate their products to collect higher price; (3) no barriers to movement of firms into or out of the market; (4) perfect information about market conditions that is available to all market participants; and (5) fully defined system of property rights in which ownership of all products and productive resources is assigned. With the characteristic given, this paper aims to determine the factors that, in most cases, prevent the US economy in achieving perfectly competitive markets. The US Market             When we look at the US today, it has various companies from different industries: Microsoft, Linux, Dell, IBM, Texas Instrument, Ford Motor, GM and many more. The US market is basically a market of innovation such that when one company offers a new product, others will make their version of that product with newer features or are created to be sold at lower price. However there are industries where perfect competition does not exist.           U.S. has strong regulations on patents, licensing and copyright protection. The country has utility patent which is granted to anyone who invents useful process, machine or any improvement on processes; and design patents which is granted to anyone who create original design (USPTO, 2005). As noted by the OECD (2006) The United States has greater patent protection than most of its trading partners. US government also has restrictions on the number of suppliers such as the New York City’s Taxicab medallion system. These restrictions served as barriers to entry resulting to lesser competition in the market since. An example of an industry affected by government restrictions is the Operating System where Microsoft Corp. seems to monopolize the industry[1] since it was it was the first to create OS. Another factor that influences perfect competition is the strong brand identity and loyalty of customers. Microsoft is again an example for this because the brand name Microsoft has been very famous that when you say OS it is always followed by “Microsoft”. The US automotive industry is another example; Ford and GM have dominated this industry in the US that although there are entrants such as the Honda and Toyota, Americans are still loyal to Ford and GM. Conclusion             One of the basic characteristics of perfectly competitive markets is having no barriers to entry but since in the US market, there are existing barriers such as government restrictions and brand loyalty of customers, there are some industries that practice imperfect competition; oligopoly and monopoly types of market exist in such companies that there is a very low threat for new potential entrants. There are still other markets or industries that practice imperfect competition which are not mentioned in this study. However, imperfect competition in these industries might change overtime since companies exert much effort in the research and development aspect of the business which may result to substitute products and break the barriers of new entrants. References: Cuellar, S., Is Microsoft a Monopoly? Accessed online on July 3, 2006 <http://www.sonoma.edu/users/c/cuellar/Research/IsMicrosoft.PDF#search=’example%20of%20monopoly%20market’> Mankiw NG. Principles of economics. Orlando: The Dryden Press; 1998.   OECD, Economic Survey – United States 2004: Product market competition             Accessed online at OECD website on July 3, 2006 <http://www.oecd.org/document/61/0,2340,en_2649_201185_31460861_70867_119663_1_1,00.html> USPTO, General Information Concerning Patents, accessed online on July 3, 2006             < http://www.uspto.gov/web/offices/pac/doc/general/index.html#ptsc>             [1] See Cuellar, S., Is Microsoft a Monopoly? <http://www.sonoma.edu/users/c/cuellar/Research/IsMicrosoft.PDF#search=’example%20of%20monopoly%20market’> Credit:ivythesis.typepad.com

Imperfect Competition in Some US Markets

Introduction A perfectly competitive market is commonly characterized by having homogenous product, having the freedom of ...

Food to the USA

<div class="entry-body"> 	 Food to the USA Trends and opportunities The market The US market with a population of over 280 million offers opportunities across a diverse range of food products. The market is heavily regulated and highly competitive, therefore quality and innovation are important features for new market entrants. In 2004, food sales in the US topped US9 billion. Combined with beverages, the food and beverage category approaches the US0 billion mark. The US imports approximately 11 per cent of its food. Natural and organic food The ageing ‘baby boomer’ population’s demand for nutritious, high-quality food has been the most important food trend in the US in the past decade. According to The Natural Marketing Institute’s 2005 Organic Consumer Trends report, in 2004 the natural and organic food segment generated US.9 billion in sales, up 18 per cent from 2003. The term ‘organic’ has a particular meaning and can only be used if it complies with US regulations. The US Department of Agriculture provides detailed information on the National Organic Program. Specialty food The specialty food segment has attracted growing consumer demand and retailer support as the demographics of the US population change. Formerly considered to be the food of the elite, gourmet foods are increasingly being chosen by mainstream consumers. In the past 10 years, specialty food sales have grown approximately seven per cent per annum. According to the NASFT’s State of the Industry Report for 2004, “A burgeoning US.8 billion dollars was spent on specialty foods at retail in the US in 2003, proving that American consumers are willing to pay top dollar for quality foods.” It is estimated that 55 per cent of all specialty foods sold are sold via supermarkets. Gourmet/specialty food stores sell 30 per cent, and the remaining 15 per cent is sold by delis, department stores, kitchenware stores, gift stores, warehouse clubs, discounters, mail order and the Internet. Ethnic food America is increasingly becoming more multicultural. Foods that were once confined to ethnic groups are quickly becoming mainstream favourites. At 37 million, the Hispanic population is now the country’s largest ethnic group, and is expected to surge nearly 50 per cent by 2020. Unsurprisingly, Mexican and ‘Nuevo Latino’ foods are very popular. Salsa, for example, is now the largest-selling condiment in the US by dollar value. Other popular ethnic foods include Southeast Asian, Indian and Middle Eastern. Sales of ethnic foods are expected to increase 50 per cent over the next decade and generate more than US million in sales. Convenience food Americans work more hours than people from any other developed country. This busy, demanding lifestyle causes many Americans to increasingly turn to ‘grab-and-go’ and ｀ ready-to eat’ items. Key trends are pre-packaged, value added, easy-to-prepare food with home-cooked/comfort appeal and a superior taste profile. Healthy food The demand for food and beverages that support healthy diets, weight loss and busy lifestyles are ever-expanding. In 2004, retail sales were estimated to be US.2 billion, and are forecasted to reach US billion by 2007. In recent years, popular US diets have been The Atkins Diet and The South Beach Diet. However, like most fads, they are experiencing a consumer backlash – specifically against the restriction of carbohydrates and the increase in protein consumption. In response, more Americans are choosing to consume healthy, high quality food in moderate quantities. Crowded categories According to Jay Rosengarten, crowded food categories include: teas/coffee, salad dressing, pasta/sauces, olive oil/vinegar, crackers, beans/rice, couscous, cookies/candy and condiments/mustards. Opportunities While brand recognition is extremely high within the specialty food category, Austrade believes there are opportunities for Australian producers of both branded and private-label packaged goods to export their goods to the US. Products such as soups, sauces and snack foods that consist of Australian native ingredients like spices or fruit are appealing to the market, as are products that telegraph their Australian-ness to consumers. Tariffs, regulations and customs The Australia-United States Free Trade Agreement (AUSFTA) came into force on 1 January 2005. The AUSFTA is a landmark agreement that gives Australian businesses expanded access to the world’s largest importer and investor. Significant export opportunities have been created through the reduction of tariffs, the increase of specific quotas, the easing of market restrictions and the streamlining of investment processes. The AUSFTA opens up important new opportunities for Australian suppliers of food items, in both the agricultural and processed food sectors. AUSFTA will result in the removal of two-thirds of all US agricultural tariffs (including lamb and horticultural products) and the elimination of a further nine per cent of agricultural tariffs within four years. Annual beef quota will increase by 20,000 tonnes within three years, reaching a total of 70,000 tonnes after 18 years. For further information please see the fact sheet on meat. For the dairy industry, there are 15-25 per cent reductions for most cheese tariffs and a rise in quota for duty-free dairy products at an average compound of five per cent per annum. For further information please see the fact sheet on dairy. In seafood, over 50 items are now tariff free with reductions between 3-35 per cent. For further information please see the fact sheet on seafood. A guide to navigating the AUSFTA tariff schedules is available from the Department of Foreign Affairs and Trade. Before exporting to the USA:

Food to the USA

Food to the USA Trends and opportunities The market The US market with a population of over 280 million offers opportunities ...