Coles and Woolworths dominate the Australian supermarket/grocery sector

The market structure in the supermarket/grocery sector in Australian is the oligopoly market structure. An oligopoly market structure is a market structure where the number of sellers or producers is limited. This is the case of the Australian supermarket sector that is dominated by the firms, Coles and Woolworths.

Explain the likely reasons for the prevalence of this market structure in the Australian supermarket sector.

One of the reasons for the prevalence of oligopoly in the Australian supermarket sector is the history of the supermarket sector in Australia. For a reasonable period, the competition in the supermarket sector of Australia has been dominated by the two firms, Coles and Woolworths. This has led to the firm foundation of the oligopoly market structure in the industry.

Another reason for the prevalence of the oligopoly in the Australian supermarket sector is barriers to entry. The intense rivalry between the two firms has made it hard for other firms to join the industry; thus making the two firms, Coles and Woolworths, be the only dominant firms in the sector.