IB Economics Extended Essay May 2016:
The assumption that international school tuition center... more IB Economics Extended Essay May 2016:
The assumption that international school tuition centers experience high barriers to entry and have the possibility of earning abnormal profits suggest that this industry might result in welfare loss within the Hong Kong economy. Hence, I am interested to find out “What market structure best represents international school tuition centers in Hong Kong?”
Surveys were conducted with international school students. Results indicate that the industry has a CR3 = 85.8% with NTK, ITS and HKExcel as the three dominant firms, relying on non-price competition. In order to discover how these firms established brand loyalty and what are the different rules and barriers to entry involved, interviews were conducted with former and current employees of the dominant centers. Locations of the tuition centers were also investigated. Geographical patterns suggested that Hotelling’s Law is applicable to this industry, therefore suggesting an oligopolistic nature. However, the PED for tuition services seems to be elastic and the prices charged for the courses across the three main firms show minimal evidence of price rigidity or competition, suggesting that the industry shows features of a monopolistic competition. Little evidence of collusive behavior implies that the industry has minimal risk of being prosecuted under the Competition Ordinance.
Overall, the international school tuition center industry is an oligopolistic market showing features of a monopolistic competition. However, this imperfect competitive market demonstrates that there is market failure. Since tuition is taking resources away from mainstream education, financial resources going into tuition can perhaps be redirected into school education so the quality of school-based education can improve.
IB Economics Extended Essay May 2016:
The assumption that international school tuition center... more IB Economics Extended Essay May 2016:
The assumption that international school tuition centers experience high barriers to entry and have the possibility of earning abnormal profits suggest that this industry might result in welfare loss within the Hong Kong economy. Hence, I am interested to find out “What market structure best represents international school tuition centers in Hong Kong?”
Surveys were conducted with international school students. Results indicate that the industry has a CR3 = 85.8% with NTK, ITS and HKExcel as the three dominant firms, relying on non-price competition. In order to discover how these firms established brand loyalty and what are the different rules and barriers to entry involved, interviews were conducted with former and current employees of the dominant centers. Locations of the tuition centers were also investigated. Geographical patterns suggested that Hotelling’s Law is applicable to this industry, therefore suggesting an oligopolistic nature. However, the PED for tuition services seems to be elastic and the prices charged for the courses across the three main firms show minimal evidence of price rigidity or competition, suggesting that the industry shows features of a monopolistic competition. Little evidence of collusive behavior implies that the industry has minimal risk of being prosecuted under the Competition Ordinance.
Overall, the international school tuition center industry is an oligopolistic market showing features of a monopolistic competition. However, this imperfect competitive market demonstrates that there is market failure. Since tuition is taking resources away from mainstream education, financial resources going into tuition can perhaps be redirected into school education so the quality of school-based education can improve.
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The assumption that international school tuition centers experience high barriers to entry and have the possibility of earning abnormal profits suggest that this industry might result in welfare loss within the Hong Kong economy. Hence, I am interested to find out “What market structure best represents international school tuition centers in Hong Kong?”
Surveys were conducted with international school students. Results indicate that the industry has a CR3 = 85.8% with NTK, ITS and HKExcel as the three dominant firms, relying on non-price competition. In order to discover how these firms established brand loyalty and what are the different rules and barriers to entry involved, interviews were conducted with former and current employees of the dominant centers. Locations of the tuition centers were also investigated. Geographical patterns suggested that Hotelling’s Law is applicable to this industry, therefore suggesting an oligopolistic nature. However, the PED for tuition services seems to be elastic and the prices charged for the courses across the three main firms show minimal evidence of price rigidity or competition, suggesting that the industry shows features of a monopolistic competition. Little evidence of collusive behavior implies that the industry has minimal risk of being prosecuted under the Competition Ordinance.
Overall, the international school tuition center industry is an oligopolistic market showing features of a monopolistic competition. However, this imperfect competitive market demonstrates that there is market failure. Since tuition is taking resources away from mainstream education, financial resources going into tuition can perhaps be redirected into school education so the quality of school-based education can improve.
Topic 6
“In knowledge there is always a trade-off between accuracy and simplicity.” Evaluate this statement in relation to two areas of knowledge.
The assumption that international school tuition centers experience high barriers to entry and have the possibility of earning abnormal profits suggest that this industry might result in welfare loss within the Hong Kong economy. Hence, I am interested to find out “What market structure best represents international school tuition centers in Hong Kong?”
Surveys were conducted with international school students. Results indicate that the industry has a CR3 = 85.8% with NTK, ITS and HKExcel as the three dominant firms, relying on non-price competition. In order to discover how these firms established brand loyalty and what are the different rules and barriers to entry involved, interviews were conducted with former and current employees of the dominant centers. Locations of the tuition centers were also investigated. Geographical patterns suggested that Hotelling’s Law is applicable to this industry, therefore suggesting an oligopolistic nature. However, the PED for tuition services seems to be elastic and the prices charged for the courses across the three main firms show minimal evidence of price rigidity or competition, suggesting that the industry shows features of a monopolistic competition. Little evidence of collusive behavior implies that the industry has minimal risk of being prosecuted under the Competition Ordinance.
Overall, the international school tuition center industry is an oligopolistic market showing features of a monopolistic competition. However, this imperfect competitive market demonstrates that there is market failure. Since tuition is taking resources away from mainstream education, financial resources going into tuition can perhaps be redirected into school education so the quality of school-based education can improve.
Topic 6
“In knowledge there is always a trade-off between accuracy and simplicity.” Evaluate this statement in relation to two areas of knowledge.