Jun 26 2007

Bali’s Oligopolistic Scuba operators

10 Responses to “Bali’s Oligopolistic Scuba operators”

1. # manonon 22 Jul 2007 at 7:51 pm

   1. The diving market in Ahmed was much more competitive than that in Pemuteran. The Oligopolistic market in Pemuteran allowed the firms to set their own high prices, as it is easier to collude with one another. In Ahmed, on the other hand, the large number of firms made it difficult for firms to set higher prices as they would lose all their customers to the many other firms offering lower prices.

   2. Collusion between the three firms in Pemuteran allowedthem to charge 60% more than the operators in Ahmed. Seeing as your title is “Oligopolistic scuba operators”, I’m going to take a wild guess and say that the kind of market structure that best describes the diving market in Pemuteran is an Oligopolistic market.

   3. The three operators in Pemuteran probably made an agreement regarding their high prices. If one of the three dive operators in Pemuteran lowered their price, the other two operators would probably do something out of the records to screw that operator over. If the one operator managed to lower its prices without getting beat up by the two others, it would greatly increase its profits by ‘taking’ many of the customers from the other two operators. It would therefore be benificial for the operator with the lower prices and the scuba divers (who can get their day of scuba diving for a lot cheaper), but would be far from benificial for the 2 other operators, who would lose a large amount of their customers and profits (except for those people who pay for the more expensive trips thinking they’ll get better equipment and gear. chyeah right :)).

   4. Assuming that the cost of opening a dive operation in Pemuteran is relatively low and there are no significant barriers to entry, it is safe to say that as the tourism industry continues to develop, the scuba diving market will become highly competitive and there will be an increasing number of firms who provide scuba diving day-trips.

2. # Elaine Lungon 30 Jul 2007 at 4:28 pm

   1. The market in Ahmed was more competitive than that in Pemuteran; more dive operators meant that the dive operators would risk losing business by setting their rates higher than their many competitors. On the other hand, in Pemuteran, there were fewer operators to choose from and consequently, fewer rivals for each operator. They more easily set and maintained high rates that way.

   2. As you probably gathered from my “definition” of economics, I know next to nothing about any terms, but seeing as your title mentions an oligopoly, I’m going to trust it. Operators in Pemuteran were able to charge higher prices because they were able to collaberate with one another to maintain the high rates without fear that one of the other operators would undermine the whole thing by setting their prices drastically lower.

   3. I’m sure the other two dive operators wouldn’t be very happy if the one operator lowered its price; I cannot say what sorts of repercussions the latter would face, but I can be certain it wouldn’t be pleasant. While the operator with the lowered price would attract potential customers from the other two operators, it would be on the whole detrimental to all the dive operators of Pemuteran because the other operators would have to also lower their prices in order to stay competitive, which would then be great for divers. By not dropping its prices, the one operator helps maintain the overall higher price of scuba gear and such in Pemuteran which is awesome for the operators and not quite so awesome for the tourists.

   4. If the cost of opening a dive operation stays low and tourism expands in the area, I would expect to see many more dive operators around and a gradual move towards the market in Ahmed - high competition, low prices.

3. # Lucas Tophamon 05 Aug 2007 at 4:21 am

   1. The difference between the diving companies in Ahmed and Pemuteran was that the diving industry in Ahmed was more competitive than the companies in Pemuteran

   2. The diving companies in Pemuteran could collude easier because there were fewer of them and meant that the diving industry in Pemuteran could raise their prices. This is most like an oligopoly market structure.

   3. The thing that is keeping the other dive companies in Pemuteran from lowering their prices is most likely the fact that if it did, the other two companies would also lower their prices and then a price war might happen, which might cause one of the companies to go out of business because they can’t lower their prices anymore because of their higher costs. So then the companies would undergo a period where they have significantly less profits which is bad. But going diving would be cheaper for divers, which is good.

   4. As the tourism industry develops, then more scuba companies will open because of the low costs and few barriers to entry to take advantage of the growth causing the diving industry in Pemuteran to become more competitive.

4. # Rebecca Sungon 06 Aug 2007 at 10:46 am

   1. At Ahmed, there were ten diving operators and at Pemuteran, there were only three. Ahmed has the more competitive diving market because it has more diving operators than Pemuteran. The diving operators at Ahmed would have to make better diving prices (meaning less money for more time, equipement, etc.) than their competitors in order to attract potential customers and stay in business.

   2. Since there are fewer diving operators in Pemuteran, they are able to maintain their high rates. I practically know nothing about market structure, but based on the title, I’m guessing an oligopolistic market.

   3. If one operator was to lower its price, I would think that the other two would lower their prices too in order to attract customers; but if that same operator continues to lower its prices, the other two would also have to continue to lower its prices and possibly one or both of the latter operators could go bankrupt because they cannot profit much from the low prices. If both of the latter operators go bankrupt, which is bad, the operator left could possibly monopolize the diving market in Pemuteran unless another diving operator, that sets a price that can compete with the current operator, is created. For the divers, lower prices are good. 

   4. If the tourism industry continues to develop in Pemuteran, the diving market there will become more competitive because there will be an increase in the number of diving operators.

5. # Tim Chuon 07 Aug 2007 at 10:59 am

   1.The difference between the two markets would probably be the popularity. The Ahmed scuba diving market was a lot more popular but a lot more competative compared to the Pemuteran market.

   2.People in Permuteran were allowed to charge higher prices probably because there was less competition and the companies were probably able to make agreements with eachother on the prices of their services allowing them to stay high.

   3.Permuteran operators would not lower their prices because there is no need to. Why would you lower your prices if you made more money. Even if they lowered the prices, the popularity of the operators would not increase by too much. If one of the operators actually did lower their prices, i would imagine that the other two companies would not be to happy and would be forced to either lower their prices or pay someone to kill of their competition. But either way, lowering prices would only benefit the divers.

   4.As the tourism industry continues to develop, competition would increase and soon enough, prices would start to fall because other companies, in order to increase their popularity, would begin to lower prices resulting in a chain of companies lowering their prices.

6. # Marco Garofaloon 09 Aug 2007 at 12:15 am

   1. The difference between the two markets was that one had a higher concentration than the other. Obviously, the one with the higher concentration of firms (that is, more firms in the market), is the more competitive market.

   2. The diving operaters in Permuteran were part of an ogilopolistic market (less than 5 firms), and were thus able to charge a more profit maximizing price (which happened to be 60% more than at Ahmed).

   3. If one firm lowered their price to attract more customers, it could initiate a price war, which would not make the other scuba operaters happier, or better off. As they do not, it could be argued that there is some collusion going on. It would, naturally, make the scuba divers better off.

   4. Naturally, as the barriers to entry are low, more firms will come in as demand increases. This will, in the short run, cut the profits of the existing firms, but it will keep the market competitive in the long run, by finding the appropriate market concentration.

7. # Katherine Yangon 12 Aug 2007 at 5:24 pm

   1. In Ahmed, there were 10 different dive operators competing against each other, therefore, in order to attract more business, Ahmed dive operators had to lower prices. Whereas in Pemuteran there were 3 dive operators competing, which meant less competition, allowing the dive operators to increase prices.

   2. The Permuteran market for diving existed in oligopoly because there are only three dive operators competing, this meant they could charge a higer price for their services without having to worry about competition from another operator. Whereas in Ahmed, 10 dive operators would have more competition amongst each other in attracting potential divers, thus, the lower prices.

   3. If one of the three diver operators in Permuteran were to drastically lower their prices, it would lead to a price war in which, in the end, benefits no one and results in all three operators hauling in lower profits.

   4. Assuming there are no barriers, as the tourism industry grows, there will be more and more dive operators competing, which will result in lower prices. Permuteran would at some point, reach or go beyong, Ahmed’s ten dive operators competing at the price of $60 per day of diving.

8. # Jessica Chiangon 13 Aug 2007 at 1:04 am

   1. The diving market in Ahmed was more competitve than the market in Permuteran. Because there were 10 different dive operators competing for customers in Ahmed, they were forced to lower their prices to a more reasonable price in order to attract more customers. On the other hand, the dive operators in Permuteran had less competition and were free to charge more money because their customers had no choice but to pay the amount if they wanted to dive.
   2. The dive operators in Permuteran had less competition than the ones in Ahmed; therefore, they were free to set high prices without worrying about going out of business.
   3. If one of the operators were to lower his prices, then the other operators would also be forced to lower their prices in order to stay in business. In the end, their prices will still be similar, which doesn’t benefit any of the operators. On the other hand, it would beenfit the scuba divers if all the prices were lowered.
   4. As the diving indstry expands in Permuteran, the prices will begin to drop, as the operators will compete for customers. It will be similar to the competition in Ahmed.

9. # kajon 14 Aug 2007 at 4:19 pm

   1. Ahmed’s diving market is much more competitive than the Pemuteran market. Because Pemuteran market was oligopolistic and allowed firms to set their own prices, they are able to collude with each other to set higher prices. The much larger number of firms in Ahmed makes it near impossible for all the firms to collude therefore they could not all increases their prices and the competition drove the prices down.
   2. In Pemuteran there are only three firms, which can collude together to charge 60% more than the firms in Ahmed. Because of the low number of firms in the competition the market structure that best describes the competition in Pemuteran is Oligopolistic competition.
   3. The three dive operators in Pemuteran have most likely made an agreement about their price. This assures each company about the same number of customers because they pay the same prices everywhere. If one operator lowered his or her price, this would result in a price war and drive the price down to the level where the companies barely make any profits. This would greatly benefit the divers because it is so much cheaper for them, however the operators would lose out on much money because they would have to lower their price in order to stay in the competition and keep their costumers.
   4. If there are low barriers to entry and the tourism continues to grow in Pemuteran, there will most likely be an increase in the number of diving operators which will make it hard to collude and therefore the price will be driven down as the competition increase.

10. # Dannyon 14 Aug 2007 at 9:39 pm

    1. The diving market in Ahmed is much more competitive than the one in Pemuteran. As there were about 10 suppliers in the market in Ahmed, it would be hard for them to all collude with one another. Thus, to attract costumers, the suppliers would offer the diving package for a cheaper price. With only 2-3 suppliers in Ahmed, they could collude with one another and gain greater profits.

    2. In Pemuteran there are only 3 suppliers and thus it would be an oligopolistic market.

    3. The 3 dive operators in Pemuteran most likely agreed on charging the price of $100. If one supplier was to lower his price, the other dive operators would probably respond by lowering their price even more. Thus there would be competition between the firms and it would be great for scuba divers as they get the same services at a lower price. Operators would lose a lot of profit as it would no longer be an oligopolistic market.

    4. There will most likely be an increase in the number of diving operators in Permuteran.

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