SECTION 2CURRENT

ECONOMIC ISSUES

Dominant Firms

GCSE ECONOMICS: UNIT 12

SECTION 2CURRENT

ECONOMIC ISSUESToday you will...

• Find out what it means to be a dominant firm?

• Analyse the reasons for market dominance

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ECONOMIC ISSUES

The final section of the course

• The topic title is ‘Dominant firms: Impact on consumers and producers plus issues of control and regulation’

• You are required to research market dominance in the following markets:– games consoles– energy production– broadcasting/television/telecommunications– Supermarkets– Transport

• You should focus on issues in your local area and in the UK

• You should restrict your study to the last ten years

• You should use a variety of data (both statistical and non-statistical) in your research

SECTION 2CURRENT

ECONOMIC ISSUESHow will you work....

• Each lesson you will investigate key topics associated with dominant firms

• The final task will involve summarising and presenting the results of your investigation

• Don’t worry, this final task will be completed in pairs!

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ECONOMIC ISSUES

Task 1: What is a dominant firm?

• Find out using the internet what it means to be a dominant firm in a market

• In each of the markets below find out who are the dominant firms in that market for the UK– games consoles– energy production, – broadcasting/television/telecommunications– Supermarkets– Transport

• The software you use to collect your results is up to you!

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ECONOMIC ISSUESWhat does this mean?

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ECONOMIC ISSUES

Telecommunications: what does it all mean?

BT29%

Virgin Media20%

TalkTalk18%

Sky18%

Other14%

Percentage share of the market for fixed broadband services (end of 2011)

Source: Ofcom

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ECONOMIC ISSUES

Task 2: What are the reasons for market

dominance?

• A firm or firms might dominate a market as a result of a takeover or merger or because the firm was the first to develop a particular product or service or for geographical reasons

• For each of the dominant firms you identified in Task 1 explain the reasons for their dominance in their market

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ECONOMIC ISSUES

Task 3: Maintaining dominations

• Firms maintain their dominance in a number of ways– Aggressive advertising – Use of patents– Predatory or limited pricing

• Complete Task 1.2 in your Student Workbook

• Extension Task: find, print and highlight articles from the internet on the positive impact of dominant firms on consumers

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ECONOMIC ISSUES

Task 4: The Impact of Dominant Firms on consumers

• Dominant firms can have both a positive and negative impact on consumers

• For example, the dominant firm Apple is able to invest in R & D to develop new and innovative products

• This R & D is only made possible given the huge profits which have been generated from its dominant position its technological markets

• In your small groups product an A3 poster which details and illustrates the positive and negative impact of dominant firms on consumers

• Include examples throughout your work!

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ECONOMIC ISSUES

Task 5: The Impact on producers or suppliers

to these Dominant Firms

• Dominant firms have both positive and negative effects on the suppliers/producers who provide them with raw materials, products and services

• For example the dominant UK supermarkets provide farmers with guaranteed markets for their products

• However the same dominant supermarkets may force these farmers to accept lower prices

• Produce an informational leaflet (one side of A4) on the impact of market dominance on the suppliers/producers in UK markets

• Include examples from the 5 markets we are focussingon

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ECONOMIC ISSUES

Task 6: How are dominant firms controlled and regulated?

• The UK government tries to control (regulate) dominant firms• For example two UK organisations which have been setup to

do this are;– The Office of Fair Trading– The Competition Commission

• The question to you is…’how does the UK government control dominant firms?’

• Open and complete the document called ‘Regulation of dominant firms in the UK’

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ECONOMIC ISSUESTask 7: Regulation…good or bad?

• There are both arguments for and against the regulation and control of UK dominant firms

• For example, regulation can often stifle firms incentives to invest in research and development if it knows it will not be rewarded for its efforts through the award of patents or the freedom to set a higher price for its goods of services

• Create a poster or presentation on the arguments FOR and AGAINST regulation & control of UK dominant firm

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ECONOMIC ISSUESTask 8: AQA Web Resources

• AQA has given you a range of resources for you to read and analyse

• Two were linked in the Task you submitted for homework

• In groups I want you to look at the remaining resources and complete the following;1. Identify any reference to dominant firms2. Identify any reference to consumers in the article and how they are

affected3. Identify any reference to producers/suppliers in the article and how

they are affected4. Identify any reference to regulation or regulatory firms in the article

and how they are affected5. Summarise the article in 5 key sentences