University | The Royal Melbourne Institute of Technology (RMIT) |
Subject | ECON1056: Price Theory Industry Analysis |
Scenario
In the island nation of Autarka, the government holds a monopoly over the provision of air freight services. Both the general public and business groups regularly complain about high prices and poor quality of service from the government-owned monopoly, Autarka Airfreight Services (AAS).
In response to these complaints, the national government commissioned the competition authority to recommend steps for improving the efficiency of the airfreight market. The commission made two recommendations:
- The airfreight services market should be opened up to competition from privately owned firms.
- Each rm operating in the airfreight market, including AAS, should be required to pay an annual lump-sum license fee to the government.
The competition authority expects that the reforms will lead to a lower cost, higher quality service. The national government of Autarka has pledged to implement all of the commission’s regulations.
Buy Custom Answer of This Assessment & Raise Your Grades
Industry structure
The airfreight market is best modeled as Cournot competition. This is because competing firms must hire aircraft and establish distribution networks before ordering airfreight services. Demand for airfreight services is,
P = 42 0:1Q;
where P represents the price of transporting a package, and Q is the total number of packages transported per year, measured in millions of packages.
At present, AAS charges $30 a package and transports 120,000,000 packages per year. While the firm is incident, it manages to return an operating pro t of $360,000,000 per year into government revenues.
The competition authority expects that after implementing the market reforms, all firms in the market (including AAS) will be more efficient. Each rm in the market will be able to transport a package at a marginal cost of $6 per package and face fixed costs of $100,000,000 per year.
Your task
The Minister for Transport has instructed you to recommend an appropriate license fee for the airfreight market. The minister has three objectives:
- Maximise government revenues from the license fee;
- Minimise the cost of airfreight services to consumers, and;
- Increase the number of packages transported per year to at least 250,000,000.
Order (ECON1056) Price Theory Industry Analysis assignment writing services today and get a huge discount on every first purchase only at singaporeassignmenthelp.com. You can boost your academic score with our marvelous economics assignment writing support. We provide you assignment help experts writing support with a free plagiarism report.
Looking for Plagiarism free Answers for your college/ university Assignments.
- Wellbeing Assignment: University Students’ Perspectives for Improving Mental Health Support
- BCLO001 Business Statistics Assignment: Analysis of Exercise Duration Among Singaporean Students
- BM4364 Customer Experience Assignment: Evaluating CX Practices Through Employee Insights in the Service Industry
- GSFM7514 Accounting & Finance Assignment: SAC Services & MEMC Budgeting and CCID Investment Evaluation
- BM0973 BCRM Assignment: Genting Highlands Case Study for Crisis Response and AI-Supported Recommendations
- AC0779 Strategic Management Assignment Essay: Key Activities & Importance in Dynamic Healthcare Settings
- ComfortDelGro Organisational Design Assignment Report: ESG Alignment with UNGC Principles & Sustainability Strategy
- Bomb Threat Management Assignment: Incident Response Plan for High-Risk Facilities in Singapore
- Security Concept Plan Assignment Report: International School Campus Protection Strategy at Jurong East
- CM3065 Intelligent Signal Processing Assignment Report: Midterm Exercises on Audio Captcha, Steganography & Speech Recognition