Question

Choose one of the following industries: Tourism, Event Planning, Real Estate, Public Transit or Health Care. For the industry you choose, conduct some research on new developments in that industry by investigating and reading some recent news articles and recent items in the news related to that industry. Once you have conducted some research, submit a post to the Discussion Board this week which answers the following questions (and be sure to include your sources!): What is the competition model for this industry (monopoly, monopolistic competiton, perfect competition or an oligopoly)? Explain your answer to demonstrate you understanding of this competition model. Who are some of the key players in this industry? What did your research tell you about trends and external forces on this industry? Which one of the 4 categories of external forces studied in class (economic, socio-cultural, political-legal, or technological) do you think impacts this industry the most in 2018/2019? Explain why, including facts from your research and at least one detailed example to illustrate.

Answer 1

We can say that real estate sector is an oligopoly because-

• In manufacturing technology, the use of flexible technology foster concentration of market

• Companies keep away from diversification & expansion of basic commodities, &

hence lessen fixed expenses

• Ownership structure is immaterial, & mergers / cartels are

welfare optimal tactics which lead to market concentration

• Flexible technology isn’t applicable to the real estate sectors

• Land is immobile & fixed, & land ownership is a precondition for any development activities

Other forces restricting concentration of real estate sector-

• Capacity constraint

• Differentiated commodities/ spatial traits of real estate

market

• Imperfect info

• Dynamic market

Amongst the 4 categories of external forces the economic factors greatly impact the real estate sector.The strength of the general economy considerably affects the real estate sector as customers’ capability to support housing prices greatly depends upon key factors such as GDP, levels of unemployment, & income growth. The Great Recession ( 2008 - 2012) highlighted the linkage between real estate sector & the broader economy. Local economies with a huge number of real estate jobs ( construction / mortgage financing) experienced considerable property price depreciation.