Learnings and Reaction

Last March 4, 2011, I learned various things with regards some economics lesson. A professor named Timothy Taylor discussed about the four types of competition. It includes their characteristics, their similarities and differences.

According to Mr. Taylor, the four types of competition are the perfect competition, the monopoly, monopolistic competition and oligopoly. He described perfect competition as strict and serves as the benchmark against to measure real life and imperfectly competitive markets. It also has basic characteristics. First is every participant in the market are price takers and no participant can influence the products. Second is it has easy entry and exit and third is the prices of the products are low. In perfect competition, the sellers are selling identical products and their prices are low. Another type of competition is the monopoly which exists when a specific person or entity has adequate control over a particular product or service to determine the terms in which individuals shall access to it. Monopoly is said to be coercive when it prohibits competitors from entering the market. The third type of competition is the monopolistic competition. It is where many competing producers sell products that are differentiated from one another but the differences such as branding are not exactly alike. In this type of competition, there are many producers and consumers in the given market and no business has total control over the market price. Consumers see that there are non price differences among the competitor’s product and the producers has a degree of control over the price. There are also few barriers to entry and exit in the market. Last type of competition is the oligopoly and it has a range of characteristics. It has the capacity to set the price. The barriers to entry I this kind of market is high. There is very little number of firms and the action of one firm can easily influence the other. The products can be homogenous or differentiated.

Mr. Taylor also tackled the antitrust. Antitrust laws are intended to promote competition in the market. These competition law make illegal certain practices deemed to hurt businesses or consumers or both, or generally to violate standards of ethical behavior.

All the things stated above are what I heard and learned during the video presentation. Hopefully, I can use these learning in the future. Since I am in a business course, I look forward to be able to exercise these stuffs I learned in case I will be having my own business.

reaction paper-February

Oil firms to hike prices by around P2/liter

By Zen Hernandez, ABS-CBN News

Posted at 02/28/2011 8:21 PM | Updated as of 03/01/2011 10:44 AM

MANILA, Philippines - There is no stopping local fuel retailers from hiking prices as the political turmoil in the Middle East and North Africa continues to threaten oil supply, the Department of Energy (DOE) said on Monday.

Small oil players Eastern Petroleum and Phoenix Petroleum already announced their price adjustments that will be effective 6 a.m. Tuesday, March 1.

Eastern Petroleum will increase prices across the board by P2 per liter.

Phoenix, on the other hand, will hike gasoline and diesel prices by P1.25 and P1 per liter, respectively.

Other firms are expected to follow suit.

"Malaki ang impact on pricing and we are doing our best to mitigate... We appealed for oil companies to implement increase on a staggered basis," said Department of Energy Director Zenaida Monsada.

Dubai crude has gone up by $8 per dollar.

ABS-CBN News sources said this would translate to P2.65 per liter increase in the price of gasoline and P2.22 for diesel.

If the hefty increases are implemented, transport group Alliance of Concerned Transport Operators or ACTO will seek another fare hike for jeepneys.

"Ggayon ay P8 (minimum), gagawin naming P9.50," said ACTO President Efren de Luna.

Another group, PISTON, is challenging the Aquino administration to impose an oil price freeze.

Lawmakers earlier proposed to grant President Aquino emergency powers to help address a possible oil crisis stemming from anti-government movements convulsing in oil-producing Libya and most of the Middle East.

"Whether we grant the President emergency powers or not, if he acts in order to protect our citizens abroad and to serve the interests of this country, the Senate will support him," Senate President Juan Ponce Enrile said.

But the President is not too keen on the idea.

"I was made to understand that there [are] substantial funds with OWWA [Overseas Workers Welfare Administration] that can be utilized for this purpose. I think the Secretary of Energy has been briefing constantly on our attempts to mitigate the price increase," he said.

Reaction:

            Continuous increase of the oil price here in the Philippines has been always a problem in the country’s economy. Increase in oil price affects greatly the living of every Filipino. Once it increase, the prices of the primary commodity and needs of a person such as goods will also increase. Due to this problem, the country is not progressing economically and it makes the life of the Filipinos more difficult. Filipinos are becoming poorer and there are many people starving because they are not able to afford to buy food. It will also result to increase in fare and many commuters are affected. Passengers can’t do anything about it especially the workers and students who need to go to there work and to their respective school.

            I, as student felt the effects of this problem. Since I came from the province, I usually went home once in awhile every time I miss my family. But now, I can’t do it always because of the expensive fare in going home to my hometown. It will be a waste of money and I can only stay in our home for few days. Student meals nowadays are also getting pricey. Being a student has a lot of concerns and expenses therefore it is really difficult to allocate the allowance given by my parents. I really practice extensive budgeting in order to allocate my allowance properly.

            As stated in the article, the oil price has increase once again. For sure there will be endless arguments regarding this matter. The drivers will complain as well as the commuters and they will put all the blame to the Philippine government. Although the government is doing their best in minimizing the increase of the oil, it is still very difficult to do this since we are affected by the global market. All of this solely depends on the operation of the global market. As a citizen of this country, all we can do is to manage our finances properly and prioritize the basic needs that we need so that in cases that another oil price hike come across, we are ready and prepared.