Nowadays, companies are determined to have sought the right market structure adopted in the companies. Because a market structure is defined by its particular atmosphere, its specific social organization system that exists between the seller and our customers on the market is also defined by its characteristic that influences its decisions in terms of products and prices. There are four types of market structure that are: Monopoly, Oligopoly, Perfect competition, and Monopolistic competition. “The three most important characteristics of oligopoly are: (1) an industry dominated by a small number of large firms, (2) firms sell either identical or differentiated products and (3) the industry has significant barriers to entry”(Weeb.pedia,2014). “A monopoly can be recognized by certain characteristics that set it aside from the other market structures: Profit maximizer: a monopoly maximizes profits. Due to the lack of competition a firm can charge a set price above what would be charged in a competitive market, thereby maximizing its revenue. And High barriers to entry: other sellers are unable to enter the market of the monopoly”(Lumen,2014). The following characteristics are essential for the existence of Perfect Competition:“(1) Large Number of Buyers and Sellers (2). Homogeneity of the Product and(3) Free Entry and Exit of Firms”(Saqip,2013)
In this essay, we focus on the perfect competition In the health insurance sector in South Africa. Before doing so, this essay will discuss all the four market structures and provide an analysis of their benefits and limitations in the market. Finally, the impact of government intervention will be analyzed in the Health insurance sector in South Africa.
Firstly, market structure is essential to firms, and consumers like it because it influences how they firms and consumers are operating within consumers market or industry behave regarding pricing, supply, entry and exit, competition and efficiency. “Perfect competition is one of the characteristics of a market structure used in economics to show the degree of high competition under certain conditions. It is also one is a market structure characterised by a large number of small businesses, a homogeneous product and a straightforward market entry or exit”(Layton, Robert & Tucker, 2002, p.173).“The characteristic of a large number of small businesses is fulfilled when each firm in a market does not represent a significant share of total output and can not influence the market price of the product. Each company works independently, rather than coordinating decisions collectively”(Layton, Robert & Tucker, 2002, p.173). The health insurance agency fits this characteristic because the largest agencies d health insurance is more suited to perfect competition, they also exist in some companies where no company can influence the market results.“For example, Assinco in South Africa guarantees specific tasks such as Purchase of glasses or prosthesis. This is due to the differentiation of products”(BGFIBank, 2016). Even in this case, “Assinco is unable to influence market outcomes, but it can set prices higher than competing health insurance without fear of losing customers. This is due to product differentiation”(Layton, Robert, 2015). Consumer demand for differentiated products is described according to two distinct approaches: different claim and homogeneous demand. The heterogeneous application assumes that each consumer has over time a request for several varieties of guarantee and the comparable order assumes that each product consists of a collection of different characteristics such as location, atmosphere, quality of food, style, etc. Duffy adds “that one of the conditions for working in a perfectly competitive market is the following: \”a price taker can not control the price of the products he sells; he takes the market price as given”.
Secondly, the mechanisms of the pure and perfect competition market theoretically make it possible to regulate the economy effectively. However, this market is unrealistic, and state intervention is needed to maintain an efficient economy. Each structure of the market is part of advantage and disadvantage. Let us follow some advantages and inconvenience of perfect competition:“(1)Perfect competition is an associated organisation that allows efficient production at the social level. There is no waste of resources because output reaches its highest level at the lowest cost, (2)Another benefit of perfect competition is that the consumer obtains a standardised product regardless of the place of purchase of the product. So, for example, if a consumer lives in city A and goes to city B, he needs the soap that normally has perfect competition. When the consumer does not have to worry about the quality of the product because it will remain the same that he buys from city A or city B(Vinish Parikh, 2015),(3)and finally the fact that the product being standardised, producers do not need to set up a commercial policy (advertising, promotions …), they are sure to sell all their production at the market price”(Vinish Parikh, 2015). Despite these advantages, perfect competition has significant disadvantages:“(1) Producers, concerned only with their costs of production, are unable to take into account problems such as negative externalities, pollution, social values. The situation of pure and perfect competition results in an economy consisting of \”black boxes\”, whose only \”technical\” function, is to transform inputs into output.(2)Firms are in essence small (atomicity hypothesis), so they are unable to seek scale effects or to develop new technologies expensive (investments in research and development are not taken into account). The effects (the constitution of the big industrial groups), associated with a waste of resources, are an economic aberration”(Web.pedia). Finally, in the insurance sector of health, we notice that Scientists progress we allowed human beings to have a prolonged experience(experiment) of life. They also fight against the fatal diseases or of significant disease as Vih, the Cholera etc. Although the politics(policy) of specific decision-maker agrees on the importance of the life of a human being, the question of the relative role of the government in the insurance(assurance) of rests of health a debate. Besides, South Africa settles(adjusts) the pricing and the reserve of the medical care heavily to maintain the low costs, then except the base(basis) of the low price. South African pay often of poaches them to keep(guard) aware(conscious) of how much they spend. The South African system has exchange previously the government had not set up a national system of health insurance and\” (RFI. Web 2011)
However, \”the government plays are role in the sector of insurance(assurance) of health a grouping makes the necessity of the attributed(awarded) for the development of the insurance(assurance) of health and the dress(toilet), by watching for the subsidy of the medicine on \” the list standard \” and one let us install(settle) the services of different préstataire health, they also check(control) the perfect competitor and the oligopoly deprived of the insurers, the South African government, made by the efforts for help by the patients who are in difficulties a financier”(Sophie, on 2016). CONCLUSION In conclusion, the theory of the structure of the market is at the heart of the economy and the centre of marketing. Besides noticing to us that these four types of construction of the market, worth knowing a, the monopolistic competition, the oligopoly, the monopoly and perfect competition, present different characteristics. Furthermore then, South African health is convinced that more competition(competitors) is necessary for all the levels so that the actors of the health system act in an economical way and the respect for the quality. In this essay, We notice that perfect competition is the best on sure plan and she is actual, she is useful, always equilibrium and also we are successful