Similarly, where jute products initially cost 100 or 150, their price rises to 300 or more.While some sectors like fruits, vegetables, retail, etc form a perfectly competitive market, some other industries like telecommunication form an oligopoly market.
Producers are the price makers and buyers dont have any option, other than going with the single seller, for example, automobile companies like Mercedes, BMW, etc. There is also sheer lack of competition and barriers to entry for other firms. An interesting feature of captive market is that although there is no natural monopoly, yet consumers have little choices in front of them and end up taking the product from the one and only seller; thereby being a part of the artificial monopoly. Moreover, like monopoly market, captive market exercises barriers to entry. They take the price determined by the seller for the same product, which they could have bought from other places by hardcore bargaining. The perfect example is of bags in footpath Vs bags with a brand name in shopping malls. At the same time, when products rotten in cold storages, there is the immediate increase in prices. Examples can be of high branded commodities, French wines and perfumes and similar products. Thirdly, it can happen when sellers own the entire buying unit, which happens in any shopping mall. Here, as the shops hire their space, they keep their prices high so as to realize their rent amount along with other related expenses. In such a situation, despite charging a higher price, students are left with no other option but to get their requisites from the school itself. Therefore, the buying unit belongs to the school and due to barriers to entry; students end up in being a price taker in the captive market. For example, food prices in ordinary malls are slightly higher than the market price. However, in the posh malls, mostly visited by celebrities and the elite, prices skyrocket. This reduces options for the buyers by default and they are left with no choices except going for a monopoly price. Both being costly places, food sellers have to pay a huge rent and do not have adequate competitors within the premise. They, being the sole producers, conduct a monopoly business by keeping prices extraordinarily high. Buyers either have to purchase from them or purchase nothing at all. Only a few stalls sell their food at prices, which are beyond the reach of normal commoners. Here also people become captivated by limited sellers and hence accept the price asked for their product. Where the initial price of rides is at 20, pricing in the last few days increases to 40 or even 50.
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