URGENT - AQA Economics Essay GCSE

Hello, could anyone please mark this?

Item A - Changes in the UK toys and games market
The market structure of the UK toys and games market has changed over time.
Supermarkets and online retailers have used their market power to force many small, specialist toy and game retailers out of business. Consumers and toy manufacturers may also be suffering because of the growth of monopoly power in the toy and game retail market. Some toy manufacturers feel that the market is being dominated by a few powerful retailers which is forcing prices down. This is damaging brands that the manufacturers have spent years building up, and leaving them with less money to invest in new products.
More than 50% of all toy and game purchases are usually made in the 8 weeks before Christmas, so smaller specialist retailers face the challenge of low sales revenue for the majority of the year. They also face the challenge of less shelf space to stock and display toys and games in the weeks leading up to Christmas compared to the big retailers, as well as online retailers such as Amazon.
Small, specialist toy and game retailers say that they can offer unique products and a better level of knowledge and customer service than that provided by the large retailers.
However, customers generally have to pay higher prices for their products. Large supermarkets and online retailers say that they can respond quickly to consumer tastes because they can quickly analyse trends in consumer purchases.
Larger toy retailers argue that they give consumers a much bigger choice than small, specialist retailers and can do so at cheaper prices because the larger firms benefit from a range of potential economies of scale.
However, even large toy retailers have been forced out of the market by the trend towards online retailers. Toys R Us was forced out of the market in 2018 as retailers such as Amazon and Argos increased their market share.
Small, specialist toy and game retailers have asked the UK government to intervene in this market. This should help prevent small firms being forced out of business by the large retailers, including online retailers. However, some small, specialist retailers are now making use of online platforms such as eBay and Amazon to reach a wider market.

Do you think the UK government should intervene to increase competition in the UK toys and games market?
Use Item A and Figure 5 and your own economic knowledge to justify your view.
[15 marks]

I believe that the UK government should intervene to increase competition in the UK toys and games market.

The UK toys and games market is developing an oligopolistic market structure which is notoriously damaging to consumers and smaller firms. There are very high barriers to entry as described in Item A. Smaller firms are being put out of business due to the competitive pricing of larger firms, and hardly make any profits to invest and improve their production with. New firms just starting out in the market will struggle to attract consumers who are more drawn in by the low prices of their competitors rather than their own more expensive but arguably higher-quality products. Smaller firms even struggle to fit enough toys on their shelves during the run-up to Christmas, making it very difficult to compete with online stores that have unlimited space. It is clear that survival is highly challenging for a new firm in the UK toys and games market.

The current market structure is also lowering the quality of the toys and games available in the market. Toys made by smaller firms tend to be more specialised and niche, whereas those produced by larger firms are typically just mass-produced identical copies of each other. Staff who work for these specialised retailers have been described as having a 'better level of knowledge amd customer service' than their counterparts who work for larger fims. The customer experience and the magic of buying toys will be ruined by the new oligopolistic market structure.

Thirdly, prices are likely to rise as the largest firms gain more price-making power. In non-competitive markets, firms are able to force average prices up unfairly high, exploiting the consumer. Demand for toys and games around Christmas (when 50% of annual sales are made) must be quite inelastic, as people feel pressured to gift loved ones the latest toys regardless of the price, meaning producers can afford to charge more for the same good. The destructive nature of the new market structure has even forced large firms out of business, such as Toys R Us, which should highlight that it is impossible for any firm to survive long.

However, there are some counterarguments to government involvement in this market. There are benefits to a small number of firms having a high share of the market - for example, large firms can gain significant economies of scale. Potentially, through bulk-buying discounts and diminished cost per good on advertising, the firms could decide to lower prices to increase demand, which would make the market more fair to the consumer. Secondly, these larger firms can use their supernormal profits to invest in new ranges of products and the latest technology, unlike the smaller, specialised firms. This gives the consumer more to choose from and possibly of a higher quality and at a lower price.

In conclusion, I believe that the government should step in to increase competition in the toys and games market, as it would make it more fair for consumers and smaller firms, however one should also recognise that there are some advantages of a less competitive market, namely greater economies of scale.