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Determinants are correct. Please include names of substitute brands in report.

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Determinants are correct. Please include names of substitute brands in report.

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Qty Supplied & Supply correctly analysed

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Qty Supplied & Supply correctly analysed

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Features on Oligopoly are correct. Thanks.

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Features on Oligopoly are correct. Thanks.

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The market structure is acceptable. Thanks.

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The market structure is acceptable. Thanks.

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s

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You are on correct track in analysis as above. Thanks.

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As the price of infant powder increases, quantity demanded of the infant powder decreases.
(general)
As the price of infant powder increases, quantity demanded of the infant powder increase.
(specific-expensive)
As the price of infant powder increases, quantity demanded of the infant powder decreases.
(specific-cheap)
Parents think that expensive infant powder is better.
Determinants of demand
Money income
If the money income increase, demand will increase.
If the money income decreases, demand will decrease.
(Infant powder is normal good)
The price of related good increase, demand will increase.
The price of related good decrease, demand will decrease.
(specific, substitutes)
Tastes and preferences
Infants prefer to a specific brand, so the demand for the specific brand will increase.
(specific)
Number of buyers
As the number of buyers decreases, demand will be decreased.
Expectation of consumers
Consumers expect the price will increase in the future, so they will buy more.

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Quantity Supply
General, Specific- The quantity supply of milk powder increases because the price of the milk powder are increasing. According to the law of supply, when price increase, the supply increase. Thus, the quantity supplied will increase.

Supply
Number of sellers (General & specific- increase) Government going to increase the number of brands in the market which means that there will be a increase in the number of sellers in the market. Therefore, the supply of the milk powder will increase.

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Income elasticity
General infant powder - Normal Good

Specific infant powder brand - Inferior good (Cheap) vs Normal Good (Expensive)

Price elasticity
General infant powder - Inelastic
Price Increase - Total Revenue Increase

Price Decrease  -  Total Revenue Decrease

Time under consideration (Specific)

Necessities vs Luxury

( General - Necessity, Expensive-  Luxury )

Availability of substitutes (General & Specific )

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1. Introduction (J)

1.1 Economics

1.2 Normative/Positive

2. Demand (RQ)

2.1 Demand

2.2 Determinants of demand

3. Supply (LN)

3.1 Supply

4. Elasticity (K)

4.1 Price Elasticity of Demand

5. Oligopoly Market Structure (SL)

5.1 Oligopoly
5.2 Non- price competition

5.3 Substantial barriers to entry

6. Conclusions (KH)

7. Appendix

8. Graphs

8.1 Demand Curve

8.2 Supply Curve

8.3 Price Elasticity

8.4

8.5

8.6

8.7

8.8

9. References

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1) Nestle, Abbott, Mead Johnson Nutrition, FrieslandCampina and Danone are the 6 big brands that sells infant formula in the Singapore market so therefore, with these few large firms, infant formula is categorize as an oligopoly competition.

2) Non- price competition
As stated in the articles, the firms producing infant formula increases their market share without changing the price of their product. Instead, the suppliers of infant formula focuses mainly on advertising their brands to market their products well. The ingredients found in all the infant formulas are rather similar regardless of their prices except for those that cater to infants with medical or allergy conditions. Suppliers often take one of the ingredients in the infant formula and place emphasis on the benefits on it and lure in the parents'' attention when in reality, it is just a way they sell their products.

3) Substantial barriers to entry
The buyers of infant formula are brand loyalty and once they find the most suitable infant formula for the child, they tend to only buy that specific brand afterwards. It is much harder for other brands to enter the market when there are already many established and well- know names and eventually, only the few large firms will be the ones left supplying most of the output in the market such as Nestle, Abbott, Mead Johnson Nutrition, FrieslandCampina and Danone.

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Maybe the Singapore government needs to step in and put a price ceiling on infant formula because it is a necessity and should not be so expensive. The price rise has been ridiculous and compared to other countries, the price rise in Singapore is the most over just a few years. Supplies say that price rise is due to the money invested in research and development of the infant formulas. However, over the past few years, there has been a huge increase of money spend on marketing, so that may have translated to a higher price of infant formula. Also, infant formula has a concentrated market, so the suppliers have high pricing power and there is a lack of choices and accurate information of the infant formulas.

To protect buyers from being overcharged as stated in one article that "Parents should, therefore, be careful about relying on the claims made by infant formula companies or be misled into using price as a proxy for quality of the product". as not every formula milk provides additional benefits that everyone may be thinking of and nutrients in the formula milk does not defer much from different brands. So the government could step in to make a price ceiling to maintain a maximum price that producers are able to sell at. (Jeremiel)

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-Perfect competition: small, identical, easy to enter
-Monopolistic competition: Many, close substitutes
-Oligopoly: Big, few
-Monopoly: One large firm, high barriers, unique. For example, Microsoft

I read in an article that Nestle, Abbott, Mead Johnson Nutrition, FrieslandCampina and Danone made up more than 99 per cent of the fortified milk formula market share in Singapore in 2016, with Abbott making up nearly half of the local market.

With that mentioned, I am 99% sure that the type of market for infant powder is Oligopoly.

I agree with Oligopoly as infant milk powders have a small number of large firms as mention above (Jeremiel)

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Everyone can choose up to 3 articles and state a reason why you chose those articles. From there, we will all come together and decide on which articles the group will be working on

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Everyone can choose up to 3 articles and state a reason why you chose those articles. From there, we will all come together and decide on which articles the group will be working on

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The articles need to be related to any miec concepts taught
-demand
-supply
-market equilibrium
-price ceiling/floor
-elasticity of demand
-fallacies
-etc.

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Price of the milk powder is increasing at two times the rate of the increase in income of parents---> higher proportion of income spent on milk powder---> price of milk powder is more demand elastic (Lyn Ni)

I believe infant milk powder, in general, is demand inelastic. As it is stated that,  "Given that infant milk formula is a necessity for many parents". Which means milk, in general, is a necessity. But, a specific milk formula is a demand elastic. When prices go up -> Consumer will definitely find a cheaper brand or the same price with a better formula. For this can be proved by Mr Sun, who said: "Price is one factor, another is the perception of what that brand and milk powder can do for their child. Obviously, parents want the best for their children, so they're willing to spend."  (Kenneth)

But since the government is also introducing a scheme for infant milk by giving out vouchers. This also means that the demand for milk powder remains the same. As stated in the news: "Given that infant milk formula is a necessity for many parents, the introduction of a $1.5 million milk scheme in February to give 7,500 low-income families vouchers to buy milk powder" (Kenneth)

In conclusion: The price increase -> Demand remains the same
Infant powder, in general, price go up -> demand price inelasticity but a specific type of infant powder, when the price goes up ->demand price elastic. (Kenneth)

With an increased of 120% in the price of an average formula milk, demand does not change much as it is an inelastic good where substitutes for infant milk powder for babies is very limited when it comes to good quality formula milk besides breastfeeding. It can also be demand elastic if we are talking about the different types of infant milk powder brands available and this can be easily affected by the 5 determinant of demand for consumers. (Jeremiel)

Taste and preference and expectation of consumers are important factors to consider as well as said by Ms Sun that " perception of what that brand and milk powder can do for their children." This means that even if prices were to increase, choosing the best choice for their children comes first and parents are willing to spend on it. (Jeremiel)

Prices of milk powder increased 120% over the last decade to $56.06,  this affected the low-income families with infant monthly expenses. Thus, the government or The Competition Commission of Singapore (CCS) have looked into rising cost of milk powder and intending to place a price ceiling. However, before placing a price ceiling the government intends to invest $1.5 million milk scheme in February to give 7,500 low-income families vouchers to buy milk powder. (Kang Hao)

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The Competition Commission of Singapore (CCS) has looked into the rising cost of infant milk formula, an issue that several Members of Parliament have voiced concerns about, and will reveal more in due course, it told The Straits Times yesterday.

In March, ST reported that the average price of a 900g tin of formula milk had increased 120 per cent over the last decade to $56.06, outstripping the increases for other dairy products and household staples.

Tanjong Pagar GRC MP Chia Shi-Lu said in a Facebook post earlier this week that many families in Queenstown on assistance have asked for help with the cost of formula powder over the years.

"In families with several young children, especially those with special formula needs, this can come up to be quite a considerable monthly expense," he wrote.

MacPherson MP Tin Pei Ling plans to ask about the rising cost of infant milk powder when Parliament sits on Monday.

MP Sun Xueling (Pasir Ris-Punggol GRC) was not able to secure a slot to deliver her speech but said in an interview that the issue is of particular concern to her as Punggol Town has the highest number of births and young children in Singapore, with nine babies born every day to residents last year.

ESSENTIAL FOR MUMS
While we promote breastfeeding, the fact of the matter is that sometimes mothers have to supplement... When I had my first daughter, the cost was about $44, now I buy the exact same one for about $55.
MP SUN XUELING (Pasir Ris-Punggol GRC)

HEFTY EXPENSE
In families with several young children, especially those with special formula needs, this can come up to be quite a considerable monthly expense.
MP CHIA SHI-LU (Tanjong Pagar GRC)

"While we promote breastfeeding, the fact of the matter is that sometimes mothers have to supplement," said Ms Sun, 37, who has two daughters aged four years old and five months. "When I had my first daughter, the cost was about $44, and now I buy the exact same one for about $55."

Infant formula suppliers have been taken to task elsewhere. In 2013, China fined six companies a total of US$110 million (S$155 million) following an investigation into price-fixing and anti-competitive practices by foreign producers.

The price of infant milk powder here has increased at nearly twice the pace of the nominal median monthly income of residents over the last decade, said Ms Sun.

Conducting an online survey on her Facebook page that drew over 2,500 responses over three days, she found that parents with children under a year old spend an average of $191 a month on formula.

"The overall point is about the cost of bringing up a child, and infant milk formula is quite a significant portion," she said, noting that a similar tin of infant milk formula can cost up to more than twice as much in Singapore than in Malaysia, Australia and Britain.

Milk powder companies have told ST the price hikes are due to research and development and rising overhead costs, though economists say it boils down to suppliers having the upper hand as it is seen as a necessity and a short-term expense.

According to market research provider Euromonitor International, Nestle, Abbott, Mead Johnson Nutrition, FrieslandCampina and Danone made up more than 60 per cent of the fortified milk formula market share globally last year, and more than 99 per cent in Singapore, with Abbott making up nearly half of the local market.

The market for milk formula in Singapore grew 17 per cent to $203.4 million over the last five years, and is projected to increase further to $209.2 million by 2021.

On the issue of the marketing of infant milk formula, Ms Sun said of choosing a cheaper brand: "Price is one factor, another is the perception of what that brand and milk powder can do for their child. Obviously parents want the best for their children, so they're willing to spend."

She found on a trip to the supermarket that some brands imply on their labels that consuming their product may make children smarter, she said, raising questions about the evidence for such claims and rules around the marketing of infant milk powder.

Given that infant milk formula is a necessity for many parents, the introduction of a $1.5 million milk scheme in February to give 7,500 low-income families vouchers to buy milk powder is timely, she said.

But more aid may be needed.

"If there are people who need infant milk formula for their child and the price is out of their reach, then we have to find a way of getting that help across to them," she said.

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Competition watchdog looks into infant milk formula prices

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The Competition Commission of Singapore (CCS) has looked into the rising cost of infant milk formula, an issue that several Members of Parliament have voiced concerns about, and will reveal more in due course, it told The Straits Times yesterday.. Read more at straitstimes.com.

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Parents are guilty of buying cheaper milk powder---> but the formula for all milk powder have the basic nutritional value for child growth and development---> government will educate parents that all milk powder are similar despite the difference in brand and prices---> so government will increase the choices of milk powder in the market---> more brands of milk powder that have price that ranges from low to high --> more substitutes  for consumer to choose from---> higher-end milk powder brand will be more price elastic (Lyn Ni)

Government is applying price ceiling on the price of milk powder---> to protect consumer from being over-charged---> in order to do that, government will exert higher pressure to control the price of milk powder such as to change the import regulation of milk powder and limit advertising and branding of milk powder---> reduce cost spent to produce milk powder---> milk powder becomes cheaper----> higher demand for milk powder (Lyn Ni)

The Government is trying to make more options available in the market which will increase the substitutes so that customers can choose according to their tastes and preferences.
The government will consider controlling measures to exert more pressure to keep prices fair. The government will apply price ceiling on the price of formula milk, which is maximum the prices below market equilibrium. There might be a shortage which caused by the price ceiling forcing consumers to spend time searching for alternatives.
Parents anxiety that they are shortchanging their children if they buy cheaper formula. So they will not consider changing to cheaper formula, they will still buy the same brand no matter how the price changes. So there will be a price inelastic to the formula milk.
(RuoQi)

Government working on increasing supply of formula milk.
The comment stated in the new article that formula milk is more expensive in Singapore than in other comparable countries. Where an increase in the price of the formula milk would decrease its demand for that particular brand but since milk powders is an elastic good for the different brands available, parents are able to get the cheaper brand of milk as long as their child are able to get used to it.

But with the expectation of consumers that cheaper formula means lower quality, they will still purchase more expensive milk formula and hence be making this an inelastic good that does not affect the sensitivity of price change.  (Jeremiel)

Milk powder is price inelastic, this is because parents are stereotyping that higher price=higher quality of the product(even though research shows that all milk powder are equally adequate). Thus, even if the price of milk powder inflates, stereotype parents are willing to buy it.
To reduce the price of the milk powder, the government or The Agri-Food and Veterinary Authority of Singapore (AVA) is trying to reduce the price of milk powder (price ceiling) by increasing more choices of milk powder which are cheaper and higher 'quality' (Kang Hao)

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All formula milk brands fulfil minimum nutritional requirements, said Senior Minister of State of Trade and Industry Koh Poh Koon in Parliament.

(Updated: )

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SINGAPORE: The Government is working to make more formula milk options available, said Senior Minister of State of Trade and Industry Koh Poh Koon in Parliament on Monday (May 8).

The Agri-Food and Veterinary Authority of Singapore (AVA) is reviewing formula milk import regulations and, if there are any changes, they could be finalised by the end of the year, he said. The Government will simplify and streamline import requirements and remove unnecessary barriers to entry in order to provide more options, he added.

He also said the Government will take steps to increase consumer awareness, encourage good practices in hospitals and further tighten restrictions on labelling and advertising. In addition, the Ministry of Health will work with industry players to make available more infant formula options in hospitals, he said.

He said the Competition Commission of Singapore (CCS) recently completed a market study, examining the milk formula industry, and the nature of competition at each level of the supply chain. The results of the study will be published this week, he said.

Should there be any evidence of companies working together to increase prices, CCS will not hesitate to investigate, he added.

He was responding to questions from Macpherson SMC Tin Pei Ling on why formula milk is more expensive here than in other comparable countries, and whether the Government will consider control measures to exert more pressure to keep prices fair. The MP for Pasir Ris-Punggol Sun Xueling asked how quickly import regulations will be changed.

Dr Koh said education is needed to allay parents' anxiety that they are shortchanging their children if they buy cheaper formula.

"We need to educate our consumers as well, that despite whatever pricing strategy they may have on the generic formula, or despite whatever claims there may be, all formula fulfil minimum nutritional requirements, and in fact are just as equally adequate," he said.

He said that for a 900g tin, some milk powder is sold at around S$20 to S$30, while others brands can be priced at up to S$60.

There should be no guilt on parents' part about getting a cheaper brand of milk, as long as their child can get used to the milk. "There's no real reason to pay up more for something that is just as good and much cheaper," he added.

He said that some products may cost more due to research and development expenditure, and some of these kinds of milk are for a restricted group, who may have allergies or medical conditions.

"What we can do is to make sure we increase the choices that are available, the options that are available and where necessary, put in the necessary financial support," he said.

One retailer has sounded its support for the Government's decision to review import regulations on formula milk. NTUC FairPrice CEO Seah Kian Peng said in a press release on Monday that the organisation shares the concerns among parents today on the cost of infant milk powder.

"We agree that more public education and understanding on the benefits of infant milk formula will help parents make more informed choices, and a review of import requirements will help us to provide better value options for our customers."

The organisation added that it provides more than 150 varieties of infant formula from different brands, formulations and pack sizes ranging from S$30 to slightly over S$100 per tin.

Parenting portal Babyment.com has revealed prices of infant milk formula in Singapore increased by an average of about 27 per cent from December 2012 to March 2017.

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More formula milk options to be made available amid concern over prices: Koh Poh Koon

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All formula milk brands fulfil minimum nutritional requirements, said Senior Minister of State of Trade and Industry Koh Poh Koon in Parliament. (Updated: ) Share on Facebook Share on Twitter Share via E-Mail SINGAPORE: The Government is working to make more formula milk options available, said Senior Minister of State of Trade and Industry Koh Poh Koon in Parliament on Monday (May 8).

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1) Review important requirements> more options> increase supply> more affordable
2) Strengthen restrictions on labeling and advertising of infant milk powder> helps to regulate the consumer behaviours because consumers have a mindset of: "more expensive= better
3) Huge rise in price over past decade> 120%
4) Concentrated market> suppliers have more pricing power.
5) All infant formula sold in Singapore meets the standards so cheaper options are just as good.
6) Gov wants imports of infant formula> to remove barriers> to increase competitiveness> price will then reduce.
7)More options>more sources of supply>greater competition in the market> prices will level out over time.
8)More public education> regulate consumer behaviours

(Suew Ling)

1) Infant milk powder is necessary so it is price inelastic.
Price increases,  the demand for infant milk powder will be decreased.
2) Breastfeeding is a substitution, as the price of infant milk increase, people will more consider about breastfeeding and buy less of instant milk powder as infant formula is needed as a form of supplementation. (substitution effect)
3) Government will take steps to facilitate more options (substitutes)
(RuoQi)

Many milk powder brands gives consumer the wrong impression of drinking their milk product will help their child to become intelligent----> parents wants the best for their child---> invest in buying expensive milk powder----> due to the change in taste and preference of consumers, higher demand for expensive milk powder (Lyn Ni)

There are many substitutes milk brands. Which means it is price elastic. The demand for the milk will definitely decrease when the price increases as there is still options to buy cheaper infant milk powder.  As it was stated that "There's no real reason to pay up more for something that is just as good and much cheaper". This means that when there is a cheaper alternative to infant powder which is as good, consumers will definitely buy the cheaper ones.  (Kenneth)

The demand for milk powder remained high despite the fact that the prices of milk powder increased 120% over the last decade. The supply of the milk powder increased as the manufacturer may believe that it is profitable to sell milk powder. This shows that inflation is happening throughout the decade yet parents are willing to buy milk powder at a higher rate. This is probably because parents believe in the misleading information that higher price milk power= high quality of the product. Hence, the government intended to use Fairprice(as you know Fairprice who originally founded by Mr Lee Kuan Yew) to control the pricing of milk powder. For example, funding a $1.5 million milk scheme, providing 7,500 low-income families with vouchers to buy milk powder this year and even launches Australian formula milk powder.
http://www.channelnewsasia.com/news/singapore/ntuc-fairprice-launches-australian-formula-milk-range-for-under-8948634
(Kang Hao)

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SINGAPORE - The Government will take steps to ensure parents have access to affordable infant milk powder, such as by reviewing import requirements to facilitate more options on shelves here and making more infant formula options available in hospitals.

The Agri-Food and Veterinary Authority will also strengthen restrictions on labelling and advertising of infant milk powder, including prohibiting the use of nutrition and health claims and idealised images for infant formula milk, Senior Minister of State for Trade and Industry Koh Poh Koon told Parliament on Monday (May 8).

While some infant formula companies give the impression that their particular brand of milk or milk powder can do more for children, the scientific evidence for this is weak, he said.

"All infant formula sold in Singapore regardless of their price meets Singapore's food regulations and nutritional needs for infants to grow healthily. Parents should therefore be careful about relying on the claims made by infant formula companies or be misled into using price as a proxy for quality of the product," he said, stressing that cheaper options are no less nutritious.

"As long as your child can get used to the milk or they are not suffering from any allergic reaction to that particular brand of milk, there's no real reason to pay more for something that is just as good and much cheaper," said Dr Koh.

There is already a range of milk formula on the shelves with prices for a 900g tin starting from about $20 to $30, up to about $60, he said.

He was responding to Ms Tin Pei Ling (MacPherson) and other MPs on the rising cost of infant milk powder. The increase in milk powder prices in Singapore far exceeds the inflation rate, and is also higher than in other countries, leading some parents to feel that they are being held "ransom", said Ms Tin.

The Straits Times reported in March that the average price of a 900g tin of formula here has increased 120 per cent over the last decade to $56.06, outstripping the increases of other dairy products and household staples.

While the Health Promotion Board (HPB) encourages breastfeeding exclusively for at least six months due to its health benefits for the baby, the Government recognises that in some cases, infant formula is needed as a form of supplementation or the main form of feeding, said Dr Koh. Children above 12 months do not require formula, however, as cow's milk together with a balanced diet is adequate to meet their nutritional needs, he said.

In an interview with The Straits Times on Friday (May 5), Ms Sun Xueling (Pasir Ris-Punggol GRC) noted that a concentrated market gives suppliers more pricing power.

According to market research provider Euromonitor International, Nestle, Abbott, Mead Johnson Nutrition, FrieslandCampina and Danone made up more than 99 per cent of the fortified milk formula market share in Singapore in 2016, with Abbott making up nearly half of the local market.

The Competition Commission of Singapore has completed a market study of the milk formula industry here and will publish its report this week, said Dr Koh.

But to encourage more competition, the Government will simplify and streamline import requirements as well as remove unnecessary barriers to entry in order to bring in more options for parents without compromising on food safety, he said.

While the HPB's Sale of Infant Food Ethics Committee Singapore already has a code of ethics that restricts advertising, marketing and promotion of infant formula to infants below six months, it is supporting an ongoing review to extend coverage to all infant formula for up to 12 months of age.

Enhanced consumer education efforts, increased choices and the improved clarity of labelling should enhance the competitiveness of the infant formula market, he said, while help is available for those that need it.

Ms Sun said in a Facebook post that the review of import requirements is important. With more choices of infant milk formula for consumers, more sources of supply and hence greater competition in the market, prices should level out over time.

In a release on Monday, FairPrice said that it supports the Government's call to address the rising prices of infant formula.

Said FairPrice chief executive Seah Kian Peng: "We agree that more public education and understanding on the benefits of infant milk formula will help parents make more informed choices, and a review of import requirements will help us to provide better value options for our customers."

To help offset rising prices, all five community development councils and the NTUC FairPrice Foundation banded together in February to fund a $1.5 million milk scheme, providing 7,500 low-income families with vouchers to buy milk powder this year.

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Parliament: Govt will take steps to ensure affordable infant milk powder options

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SINGAPORE - The Government will take steps to ensure parents have access to affordable infant milk powder, such as by reviewing import requirements to facilitate more options on shelves here and making more infant formula options available in hospitals.. Read more at straitstimes.com.