Macroeconomics Homework

One of the possible characteristics of the UK national daily newspaper would be the tight competition that exists in the said market due to the availability of the large number of newspaper companies. This characteristic of UK national newspaper causes tight market competition among its member firms.
Another characteristic would be the difficulty of market entry in the said industry. This can be attributed to the large number of newspaper companies that already exist in the market. Price competition serves to be one of the major factors that attract more customers based on the given case. Moreover, innovation is also vital to the newspaper industry of UK since newspaper readers now prefer newspapers in a form of either tabloid or any other style that is much different from the conventional broadsheet from of UK’s newspaper.
Using the theory of oligopoly, discuss why the Guardian chose to launch a new design of paper in 2005.

Read also Homework Solutions – Chapter 3
On the other hand, the reason why The Guardian launched a new design of newspaper mainly because they have to go with the flow on what other companies has been doing into their products. It was identified that almost all of the competitors of The Guardian has already been shifted from their conventional broadsheet newspapers to smaller design of newspapers like tabloid.
One characteristics of Oligopoly would be the fact that any action of one firm in the market may it be price or marketing strategy, always affects other players on the said industry (Tutor2u.com 2007: 1). The fact that The Guardian was forced to make new designs for its newspaper would necessarily mean that they were affected by the strategies of their competitors of transforming the size of their newspapers. Moreover, based on the case, price only matters less or only among the many factors that affects the demand of newspaper readers which is also a part of the traits of Oligopoly.
Works Cited
Tutor2u.com (2007). Oligopoly [online]. Available: http://tutor2u.net/economics/content/topics/monopoly/oligopoly_notes.htm [Accessed