Hungry Jack's Market Structure

Hungry Jack's belongs to the perfect competition market structure. There exists product differentiation whereby Hungry Jack's products are fire-grilled compared to the usual fried fast food. Also, the company is involved in non-price competition because of differentiated producs. For example, Hungry Jack has a popular tagline 'The burgers are better at Hungry Jack's' and sponsors the West Coast Eagles to be used as part of promotion.

One market failure is the asymmetric information. This occurs when one side of the market does not receive equal or sufficient information of the product. For example, consumers of Hungry Jack's fast food might not be told the ingredients or calorie content in their food. Customers are not able to decide on which food to purchase because they do not know the nutritutional value in each type of food.

Another example of market failure in monopolistic competition is negative externalities. A third party suffers the cost of

Thirdly, monopoly power or market power is present in a monopolistic competition market. Hungry Jack's has some degree of control over the sale of a product. Hungry Jack's food are unique because they are fire-grilled unlike the other fast food chains. Therefore, they can determine the price and conditions of sale. If Hungry Jack's chooses to increase their price, consumers will have to pay a higher price if they want to eat the fire-grilled food.

One possible form of government intervention to overcome inadequate information is through implication of legislation. The Government of Australia can pass law that requires Hungry Jack's to display all the ingredients and calorie content of their products on the menus.

Besides that, the government can also impose tax on the food in Hungry Jack's. The aim is to reduce consumption of the unhealthy fast foods and also increase income for the government. With the imposition of taxes, the cost of production for Hungry Jack's food increases, the price of the food sold increases thus the demand for fast food decreases.

Sellers try to decrease competition by making their products different from the others. Since each firm attempts to make its product unique, unique, there is an "element of monopoly",

thus monopolistic competition. Product differentiation, when it is successful, enablesa firm to "establish a kind of monopoly" so that loyal customers will prefer it rather than buy from the competition. [They try to monopolize a small portion of the market.]