Oligopoly and possible collusion in the UK domestic utilities market Essay

Oligopoly and possible collusion in the UK domestic utilities market - Essay Example Utilities market is essential for every country and any disturbance in the utilities market can have detrimental impacts on the economy of the country. It is of utmost importance that every country ensures that the organizations involved in utilities market are operating smoothly and fairly. The following paper would analyse the domestic utilities market in UK, the organizations involved in providing domestic utilities, and the analysis of the recent hike in prices of the domestic utilities. The paper would attempt to evaluate whether the rise in price of utilities in domestic utilities market in UK is a result of oligopoly and possible collusion in the market. DOMESTIC UTILITIES MARKET IN UK Domestic utilities market in UK is a vast and diverse sector of the UK economy. It includes a number of companies that provide energy and other utility services. The UK utilities market comprises of; the oil, petroleum and gas; nuclear power and coal; water and waste management; renewable energy industries; and energy conservation organisations. The utilities market in the UK plays a significantly important in the economy of the country. ... mers, markets traditions, products and knowledge required in order to succeed in the utilities market in the UK are considerably different than those required in other industries. In other industries, the main objective of the companies is to succeed by way of earning more and more profit. The entry in other commercial industries is comparatively easier therefore the number of firms in other industries is high. The competition within an industry is determined by the number of firms and the availability of substitutes in the market, and the level of prices is determined by the extent of competition in the industry. Therefore in the commercial industries the prices of products are determined by the extent of competitiveness of the industry. This situation is completely different from that of the utilities market. Utilities market have fewer number of companies in the market therefore there is a clear tendency for high prices for the utility services therefore regulatory authorities pla y an important role in the utilities market in order to ensure that the prices of services provided to the citizens are reasonable (Simmonds 2000). Even though the utilities market is different from commercial, industrial and residential markets; it is considerably a big sector in the UK economy. From the perspective of revenue, the UK utilities industry forms a significant proportion of the overall economic growth of the country. In the year 2010, the UK utilities industry had total revenue of $126.3 billion. The most successful segment in the UK utilities industry is the electricity segment. The total revenue of the electricity segment was $57.6 billion. It has been anticipated that the industry will continue to grow and the overall value of the UK utilities industry by the end of the