By Bedelbaeva A.

Price and Output under Monopolistic Competition.

Case study: The Poultry farming in Kazakhstan.

Before 1996 there were not many poultry farms in Kazakhstan and because of that a lot of eggs, poultry meat were imported from Russia.

Lots of people bred hens by themselves owing to lack of these products.

There were not control of production and control of distribution.

May 1996 Seymar won concession for poultry farms management of Chapayevo (OJSC Altyn KVS), Abai (OJSC Abai), Kaskelen (OJSC Phoenix).

August 1997 – Having demonstrated excellent managerial results, Seymar acquired controlling stakes in all poultry farms.

March 1998 – The assets of all four poultry farms were transfered to a newly – established company, OJSC Almaty KVS. Chapter capital was formed of the assets of poultry farms and brand name "Seymar". There are control of farms

• Sets wholesale product prices

• Fixes monthly lease payments

• Sets and controls quality standards

• Appoints exclusive distributors of eggs.

and control of distributors:

• determines monthly franchise payments

• sets and controls product quality standards

• promotes competition among distributors

Markets and Competition

Almaty KVS’ market share in the Almaty region.

Almaty KVS’ market share in KZ

• Almaty KVS dominates both regional and national markets with respective market shares of 80% and 33%

Almaty KVS’ market share in the Almaty region

• The only competitive challenge to Almaty KVS comes from Russian and China

• However competitors’ products have inferior market profile

• Resent Governmental "buy – domestic" initiatives add optimism about the competitive position of Almaty KVS.

1. Without promotion and packaging, using brand names and trademarks would you characterize "Almaty KVS"?
2. Would you characterize "Almaty KVS" as monopolistically competitive if "Almaty KVS" didn’t pay attention to quality of its’ product?
3. If you have prices for eggs:

And for 1538 eggs what TR will you have for each egg (for standard, extra, super, optima, melkoe).

True or False

• Entry into monopolistically competitive industries tends to be difficult.

• In monopolistically competitive markets neither allocative nor productive efficiency is realized.

• Product competition is not an important avenue of technological innovation and product betterment over a period of time.

Problem Questions

1. (From figure 1.) What arguments can you say in favor of advertising?
2. (From figure 1.) What arguments can you say against advertising?

Using materials:

1. WWW. AlmatyKVS. Kz

2. "Economics" Campbell R. Mc Connell, Stanley L. Brur.