Definition:
Monopoly is the kind of market with only “one seller”
and its goods has no close substitutes. It is a pricesearching market of which sellers search prices to
maximize wealth.
$19.00/catty
Mainland Pigs
Sole Pork Supplier
&Wholesaler
Retailers
NG FUNG HONG(五豐行)
Park’N Shop
Wellcome
Wet Market
Butchers
Others
Food Stores
• Everyday, about 5,500 pigs are imported
from the mainland and consumed in HK.
•All of them are slaughtered and sold to the
market retailers by Ng Fung Hong Only.
Ng Fung Hong is the sole agent selling imported
mainland pigs
In economic sense, the pork wholesaling market is a
monopoly and Ng Fung Hong is a monopolist.
Why is it a monopolist?
Sole ownership of essential resources or
production technique
Patents or Copyrights
Monopoly right
Natural monopoly
Government franchise
Formation of cartel
Why is it a monopolistic competition?
Definition:
It is the kind of markets with
•A large number of sellers who are small and not associated.
( Within a district, there are many isolated wet market butchers and
supermarkets)
•Heterogeneous products
( Different shops may have different service and techniques )
•Imperfect information
•Free entry and exit
Sellers include:
Wellcome
Park’n shop
Wet market butchers
Monopolistic
Competition
Monopolistic
Competition
Oligopoly
• The pork retailing market is now in a monopolistic competition, Park’n
shop and Wellcome may try to use price-cutting to drive away the small
wet market butchers.
• In this way, Park’n shop and Wellcome can enlarge their market
share and may turn the market into an oligopoly.
•Besides, the supermarkets also want to change the
traditional culture of buying food from wet market to buying
from supermarket.
Imail (7 May)
…...Park n Shop announced on Friday
that it would ``permanently'' cut the price
of pork to an average HK$19 per catty
and Wellcome followed …….
What implication can we get from this news?
Monopolistic
Competition
Oligopoly
• The pork retailing market is now in a monopolistic competition, Park’n
shop and Wellcome may try to use price-cutting to drive away the small
wet market butchers.
• In this way, Park’n shop and Wellcome can enlarge their market
share and may turn the market into an oligopoly.
•Besides, the supermarkets also want to change the
traditional culture of buying food from wet market to buying
from supermarket.
How can they be able to take such action?
Here are the possibilities:
• Ng Fung Hong, the pork supplier, may have given them a
discount that enables them to have a lower price. (but it can not be
proved yet)
•They are large corporations, therefore, they have the sufficient
capital needed such as Park’N Shop under Hutchison Whampoa
Limited, Wellcome under Dairy Farm International Group.
•They buy pork in bulk, thus they can have a lower average cost
than the isolated butchers.
Some people, e.g. the Butchers, demanded:
END THE
MONOPOLY OF
NG FUNG
HONG…….WE
CAN GAIN
FROM IT!!!!
Can we really gain from ending the monopoly of Ng
Fung Hong?
Some people argued that after end of monopoly,
1. The price of the pork will not be so easily controlled by
Ng Fung Hong.
2. More choices of wholesalers can be given to the retailers.
However, there are disadvantages as well,
Before,
Ng Fung
Hong
Retailers
AFTER,
A
B
C
D
E
F
Retailers
However, there are disadvantages as well,
Before,
Ng Fung
Hong
Retailers
MORE EFFICIENT
AFTER,
A
B
C
LESS EFFICIENT
D
E
F
Retailers
The benefits of the continuation of
Ng Fung Hong’s monopoly
•
Reduce Transaction cost
•
Better quality control
- Ng Fung Hong centralizes the monitoring of the feedstuff and
the quality of the imported mainland pigs.
Our Opinion:
Customers may now be happy about the
cutting prices of pork of supermarket. However, we
believe that if the situation continues, it will not be
good for the customers since wet market may be
replaced by supermarket and disappear forever. Then
prices will be more easily controlled and customers
will also be left with fewer choices.
Group member: 6A
Cherry Cheung (9)
 Elaine Ng (21)
 Sarah Wong (27)
