Theory of the Firm:Analyzing the Market Structure of the Canned Tuna

Industry
What Market Structure Best Characterizes the Canned Tuna Industry in the
Philippines, National Capital Region area ?
Word Count: 3960
 Table of Contents
Introduction………………………………………………………………………………3-4
Hypothesis……………………………………………………………………………….4
Market Powers: Assumption of each Market
Structure………………………………………………………………………………...4-8
Methodology…………………………………………………………………………….8-9
Analysis………………………………………………………………………………….9-27
Conclusion………………………………………………………………………………27-28
Evaluation……………………………………………………………………………….28-29
References……………………………………………………………………………….29-30
Appendix…………………………………………………………………………………...30-33
● I.Interview
Transcripts………………………………………………………………………….30-33
Introduction

Canned Tuna is a staple for all Filipino households. Not only is this product affordable

with the average price of a can being only 34 pesos, it is also a very nutritious and fulfilling

meal. A single can of tuna is rich in proteins, and typically contains a variety of vitamins,

minerals, and omega 3 fatty acids, including iron, selenium, phosphorus, vitamin A, vitamin D,

B-Complex, DHA and EPA (No name,2018). Because of these facts it can be said that canned

tuna serves as a good healthy alternative for lower-income households due to its high

affordability and nutritional value. Due to this fact, it can be said that the behavior of firms in

the Canned Tuna industry deeply affects the lives of many Filipinos, because they’re actions

impact the ability of lower-income Filipinos to afford the good. That is why it is important for us

to know the market structure of the Canned Tuna Industry, so that we can predict the firm's

behavior. Besides its big influences in society, canned tuna also has a big impact in my life. My

family regularly eats canned tuna for breakfast due to its cheap prices, high nutritional content

and deliciousness. Therefore, because of the aforementioned effects that canned tuna brings to

society and my personal life , I decided to use the canned tuna industry as the topic of my

research. I specifically wanted to find out how firms in the canned tuna industry typically

behave, the factors that influence prices in the canned tuna market, and the overall market

structure of the industry. Using these three aims I then constructed a research question that

encapsulates my entire investigation: What Market Structure best characterizes the canned

tuna industry in the Philippines (National Capital Region) market ?. Now it can be seen from

the research question that the economic concept of interdependence, which refers to the idea

that economic decision-makers are dependent on each other (no name, 2018) is relevant to this
discussion because determining the extent to which competition firms, and consumers dictate

the action and decision of one canned tuna firm in the industry will be crucial in determining

the market structure.

Hypothesis

Based on personal observation I believe that the canned tuna industry is an oligopoly

because it can be observed that Filipinos often consume canned tuna products from only 2

firms either San Marino or Century Tuna which goes along with the characteristics of a duopoly.

There’s also very clear evidence of ongoing R&D (research and development) and product

differentiation as evidenced by the wide variety of canned tuna flavors often seen in

supermarkets when I go grocery shopping.

Market Powers: Assumptions of Each Market Structure

In economics a market is defined as a place where buyers and sellers interact and carry

out a transaction. Under the market power’s unit of microeconomics it is established that there

are 4 different market structures: Perfect Competition, Monopoly, Monopolistic Competition,

and Oligopoly. For this section of the investigation, the assumptions of each market structure

will be mentioned, these assumptions will serve as a guide for answering the research question.

A. Perfect Competition

○ Large number of firms

i. These firms are usually small and have little market power in the market
 (Gordon, 2022)

○ Free entry and exit

○ Perfect and complete Information

i. Firms have complete information on their competitors

○ Perfect resource mobility

○ No barriers to entry

○ In the long-run all firms achieve zero economic profit

i. Their total profit is equal to average total cost therefore firms achieve

only break even point

ii. All economic profit will be eliminated due to new firms entering the

market

○ All firms produce homogeneous products

i. This means all the firms produce the exact same product

○ Price takers

i. Firms take whatever price is determined by the market.

ii. Price is always constant regardless of output

○ Allocatively efficient

i. Firms to the optimal amount of output that society deems optimal and

prices match consumer preferences as evidenced by prices being equal to

marginal cost (Gordon, 2022)

○ Productively efficient

i. Competition incentivizes firms to reduce average costs to a minimum

 (Gordon, 2022).

B. Monopoly

○ There is a single seller who is the dominant firm in the market

i. The dominant firm controls at least 80% of the market

○ No close substitutes

i. They produce the entire supply of the good/commodity

○ There are significant barriers to entry that limit new firms from entering the

market

i. Come in form of economies of scale, branding, legal barriers, control of

essential resources, and aggressive tactics

○ Price Makers

i. Firms changes Price depending on output

○ In the long-run dominant firm achieves supernormal profit due to high barriers

to entry

○ Allocatively Inefficient

i. Firms often tend to produce less than what society deems optimal

because they wanna maximize profits (Hayes, 2021)

○ Productively inefficient

i. No direct competition causes monopolist firms to have no incentive to

reduce average costs to a minimum (Hayes, 2021).

○ High Barriers to entry

C. Oligopoly
 ○ Small numbers of firms that dominate the market

i. Around 2 to 3 firms

○ High barriers to entry

○ Mutual Interdependence

i. Decisions of one firm affects all the other firms

○ Products can differentiated or homogeneous

○ Prices are sticky

○ 2 types: Collusive and Non collusive

i. Collusive: firms behave collectively like a monopoly in order to maximize

joint profit

ii. Non Collusive: no collusion, firms compete with each other through

non-price competition

○ In the long-run firms achieve supernormal or subnormal profit

○ Firms are Allocatively Inefficient

i. Similar to a monopoly, Firms in an oligopoly tend to produce less than

what society deems optimal because they wanna maximize profits (No

name , 2021)

○ Firms are also Productively inefficient

i. Similar to a monopoly, firms in an oligopoly lack competition, because of

that firms often lack incentive to reduce average costs to a minimum (No

name , 2021)

D. Monopolistic Competition
 ○ Large number of firms

i. Each firm has a small share in the market

○ No barriers to entry and exit

○ Product differentiation

i. Each firm produces a product that is different from the other

○ Firms compete with each other through non price competition and price

competition

○ The entry and exit of firms ensure that in the long run all firms earn zero

economic profit

○ Firms are Allocatively inefficient

i. Similarly to a monopoly, firms tend to underproduce then what society

deems beneficial in order to profit maximize (No name, 2022)

○ Firms are Productively efficient

i. The presence of direct competition, incentivises firms to lower their

average costs to the minimum

Methodology

For this investigation primary and secondary data were both collected. Primary data

regarding the firms that make up the industry were collected in two ways, one is through

interviewing representatives coming from firms in the Canned Tuna Industry. The second is by

visiting the firms respective online stores so I can gather information on their respective canned

tuna producers and prices. Together the firms I interviewed make up 95% of the market.
Therefore it can be said that I was able to sufficiently represent the entire industry. Primary data

in the form of consumer information was conducted by surveying highschool students and

working adults (18-65)about their canned tuna purchasing habits, the participants for this study

were generalized only to people living in the National Capital Region, this is so researchers can

have a deeper understanding about how the canned tuna industry behaves in the target market

area. Secondary data on the other hand was collected through researching different articles

related to my chosen firms and articles related to the microeconomics topic of Theory of the

Firm.

Analysis

A. Size and Number of Firms in the Industry

In order to identify the canned tuna industry’s market structure, the first step was to

identify the size and number of firms in the industry. To identify the number of canned tuna

firms that operate in the National Capital Region area I conducted an online survey asking

consumers about their purchasing preferences when it comes to buying canned tuna products.

The survey specifically asked the question: Which firms do you often buy your canned tuna

products from ? Which was effective in identifying the number of competitors in the canned

tuna market.

This survey had 300 respondents all coming from the national capital region area, which

ensures that the data gathered is generalized to the target market area. These respondents

were gathered through convenience sampling

Figure 1: Pie Chart showing the survey results for question 1

Question 1: When purchasing canned tuna, which firm do you often buy your canned tuna
product from ?

Figure 1 shows a pie chart illustrating the survey results for question 1, in this survey it

was seen that there are 6 firms that are competing with each other in the canned tuna market.

These firms are: Century Tuna, San Marino, Gold Seas, Permex, Chicken of the Sea, and Kirkland.

From this survey it can be seen that 85.8% of the respondents said Century Tuna, 6.4% of the

respondents said San Marino while the last 7.2% said the other competitors (Gold Seas, Permex,

Chicken of the Sea, Kirkland). From this it can be seen that there is a clear larger consumer

preference for Century Tuna in the NCR area which could be indicative of Century Tuna being

the dominant firm in the canned tuna national capital region market. This in-turn rules out

perfect competition, because the presence of a dominant firm directly goes against the main
assumption of perfect competition which is that there is a large number of competitors in the

market, each having small market power and influence in the market.

After identifying the number of competitors in the market, I was then able to identify

the size of the market. From this survey it can be seen that the 2 biggest competitors in the

market are Century Tuna and San Marino. Using this information I then interviewed

representatives coming from both firms since it can be seen that these 2 firms have the biggest

influence in the market.

For Century Tuna the person I interviewed was Mr Greg. Mr Greg is the marketing head

of century tuna, While for San Marino the person I interviewed, explicitly told me that he isn’t

comfortable with exposing his identity, therefore for the purposes of privacy I will be calling him

A.B.

The one question asked that is relevant to this section of the EE was regarding market

shares. To both representatives I asked the question: What percentage of the canned tuna

market do you own in the national capital region area ?, for Century Tuna Mr Greg proudly said

that “Century Tuna owned 85% of the market shares in the NCR area”. While for San Marino Mr

A.B said that “San Marino owns 10% of the market shares in the NCR area”.

Using this information I was then able to create a 2 firm concentration ratio which was

crucial in identifying the level of competitiveness in the industry, and the size of the market. A 2

firm concentration ratio was used because it can be seen in the survey and from the interviews

that the 2 biggest firms in terms of market power in the industry currently are Century Tuna

(85% market share) and San Marino (10%)

Figure 2: 2 Firm Concentration Ratio of the Canned Tuna Industry in the national capital
region market.

Century Tuna San Marino Others (Gold Seas, Total Concentration

Permex, Chicken of Ratio
the Seas, Kirkland)

85% market share 10% market share 5% market share 2 firms: 95% of the
market

Figure 2 shows the 2 firm concentration ratio of the Canned Tuna Industry, from this

table it can be seen that the canned tuna market is highly concentrated as evidenced by 95% of

the market shares being owned by 2 firms. This high concentration typically means that

competition is very low in this industry and it only occurs between San Marino and Century

Tuna. It also means that in regards to market size, the market size of the canned tuna industry is

small, this is evidenced by the fact that there are only two main competitors in the market:

Century Tuna and San Marino. Typically a monopolistic competition and perfect competition

market structures have concentration ratios that are less than 40% (Merger,2010) because of

that since the concentration ratio identified was 95%, monopolistic competition and perfect

competition were effectively ruled as potential market structures for the canned tuna industry.

Besides that, the extremely high concentration ratio of 95% also supports the idea that there is

a clear presence of a dominant firm which again further supports the claim made in the earlier

sections that the market structure is a Monopoly.

Overall this section shows that perfect competition and monopolistic competition can

effectively be ruled out due to a lack of competition. This section also effectively supports the

idea that the current market structure is a monopoly as evidenced by the presence of a

dominant firm in the market.

B. Barriers to Entry

Barriers to entry are essentially any obstacles that prevent new firms from entering the

industry, some examples are intense brand loyalty, and legal barriers (No name 2022). To

determine the degree of barriers to entry present in the market I determined if these examples

of barriers are present in the industry.

Intense Brand Loyalty

Intense brand loyalty discourages firms from entering the market because it makes it

difficult for new entrants in the industry to establish themselves and acquire a customer base.

In the short-run this makes it difficult for newer firms to earn break even profit since customers

will be more inclined to buy from firms that they are loyal to in that industry (Kathryn, 2020).

To determine if brand loyalty is present in the canned tuna industry in the national

capital region area, I conducted a survey asking the 300 respondents about their customer

loyalty and its effects on their canned tuna purchasing habits.

Figure 3: Pie chart showing the results of the question: Do you always purchase your canned
tuna from the same firm

From this figure it can be seen that there’s a high degree of brand loyalty present in the

canned tuna industry in the NCR area. This is evidenced by the fact that 60% of respondents

answered that they purchase their canned tuna from the same firm.

Legal Barriers

Legal Barriers are government legislations and regulations enforced that make it very

costly and difficult for new firms entering the canned tuna industry. To determine the degree of

legal barriers present in the industry I used Llanto,et al (2017) study titled: Reducing

Unnecessary Regulatory Burden: The Philippine Tuna Industry as a reference in identifying

specific laws & regulation being enforced by the government.

Figure 4: A Table showing the different Legislations and Regulations enforced in the Canned
tuna Industry
Description of the legislation
Commercial fishing vessels must obtain a
fishing vessel license and fishing gear
registration and license from BFAR, before
being allowed to conduct fishing expeditions
in Philippine waters. Of course a fee must be
paid by the owners of the vessel before
license is granted and a set of guidelines
based on Fisheries Administrative Order must
be followed in order to keep their license.
This is done by the government so that they
can regularly monitor and ensure that the
fishing vessels, apparatus and fishing gears
being used are environmentally friendly
Tuna landing sites and cold storage facilities
must be HACCP accredited. To be HACCP
accredited, these tuna facilities require a
SSOP (Sanitation Standard Operating
Procedure) and GMP (Good Manufacturing
Practices) plan.
In compliance with the consumer act (RA No.
7394), courtesy of the DA Administrative
Order No. 21 cold storage warehouses and
factories of tuna must obtain a certificate of
accreditation from the DA before it can be
allowed to operate to ensure that the tuna
stored in these facilities are safe for human
consumption.
Regular government health inspections are
done by authorized inspectors or agriculture
compliance officers from BPI, BAI, BFAR,
NMIS to ensure that sanitation and health
guidelines for tuna factories and storage
facilities are followed and maintained
Catch Ceiling Limitations - The Philippine
Effects on new firms entering the canned
tuna industry
Increases the start up costs of newer firms
because they’ll have to pay for the license
and the modifications being done on their
fishing vessels so that it abides by the
guidelines set on the Fisheries Administrative
Order.
This contributes to the high start up cost felt
by new firms entering the canned tuna
industry because implementing a required
sanitation plan will undoubtedly adds to start
up cost of starting a factory and storage
facility
Also contributes to the high startup costs felt
by new firms because implementing
sanitation guidelines leads to added cost in
the initial cost of production.
Contributes to the yearly high cost of
production felt by newer firms in the industry
because maintaining these facilities to the
standards set by the different government
agencies increases the yearly operational cost
of these facilities.
Limits the amount of tuna available for newer
 Fisheries Code of 1990 places a quota on the
amount of fish that fishing vessels can catch
per fishing expedition.
firms entering the canned tuna industry. In
addition to that this makes tuna as a resource
more expensive for newer firms entering the
industry which contributes to the very high
start-up cost felt by the firms.

So as proven by this diagram, the government legislations and regulations enforced act

as a deterrent to newer entrants because it leads to extremely high start-up costs

Overall from this section it can be seen that the canned tuna industry specifically in the

NCR area has extremely high barriers to entry. Which further supports the idea that the market

structure of this industry can only be either a collusive oligopoly or a monopoly.

C. Method of Competition

The methods of competition present in an industry is a key way for economists to

identify the market structure of a certain industry. That’s why for my analysis of the canned tuna

industry, I intently analyzed and determined the degree of price and non-price competition

present in the canned tuna market. I also identified the ways in which these methods of

competition (price and non-price) are seen in the market.

Price Competition

The first method commonly seen in different market structures is price competition.

Price competition is a method of competition in which firms compete with each other through

pricing, oftentimes this involves firms reducing their prices to being slightly above cost of

production in order to incentivize consumers to buy their products over their competitors

(Bhasin, 2019). Because of that, normally one effect of price competition is that it leads to firms
achieving low levels of supernormal profit (Bhasin, 2019). Therefore in order to determine the

degree of price competition occurring in the market, I calculated the profit margins of the

biggest competitors in the market: San Marino & Century Tuna.

Profit margin refers to the percentage of revenue generated that turns into profit earned

by the company (Segal, 2021). Generally if profit margins are low then that means that the

typical asking price for a good that a firm sells is low and just barely above cost of production

Segal, 2021), Since profit margins serve as a good way to operationalize and measure the level

of supernormal profit experienced by firms in the industry, it can be said that profit margins

serves as a good way to quantifiably determine the degree of price competition present in the

market . Because of those reasons this is why I decided to calculate for profit margins of both

competitive firms (Century Tuna and San Marino).

To solve for profit margins of San Marino and Century Tuna, I asked both representatives

about their total net sales, total cost and net income incurred in 2021. The table below shows

the respective companies: net sales, specific costs & expenses and net income

Figure 5: Table showing each respective companies: Net sales, Cost & Expenses and Net
income in Pesos

Century Pacific San Marino

Net sales 14, 500,000,000 3,000,750,000

Cost of Good Sold 10,585,000,000 1,652,325,581

Ad & Promo cost 290,000,000 450,000,000

Sales & Operations 1,160,000,000 118,023,256

Gen Admin Expenses 217,500,000 28,325,581

 Total Opex (Cost) 1,667,500,000 596,348,837

Net Income before Tax 2,247,500,000 111,790,698

Net income 580,000,000 155,726,745

Profit Margins of each firm: 4% 5.18%

𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
𝑥 100

Figure 6: Profit Margin ranges for all industries and its meanings when it comes to profit levels
for firms within that industry (Brex,2020)

Extremely low (Firms in that industry are not >0%

making profit)

Very Low (Firms in that industry are making 0%

economic/zero profit)

Low ( Firms in that industry are making low 1%-6%

levels of supernormal profit)

Below Average (Firms in that industry are 7%-9%

making below average levels of supernormal
profit)

Average (Firms in that industry are making <10%

neither low or high levels of supernormal
profit)

High (Firms in the industry are making high <20%

levels of supernormal profit)

As seen in figure 5, the calculated profit margin is within the 1%-6% range which is

considered low. In relation to price competition this means that generally firms in the canned

tuna industry often set their prices per unit of goods at a relatively reduced price level in order

to lure consumers away from their competitors. Which in turn causes them to achieve low

levels of supernormal profit. Thus this reaffirms the sentiment that price competition is heavily

present in the canned tuna industry because it leads to low market prices and low supernormal

profit
Figure 7: Price level of canned tuna products of both firms w/ cost of production indicated for
each product, taken from interviews coming from both representatives

Name of the Name of the Price per 180 Cost of Percentage

Product Selling Product grams of that production of increase in price
the Firm product in pesos each product in level from cost
(₱) pesos per unit of to production to
production prices indicated

Century Tuna Regular Tuna 40 38 5%

Century Tuna Hot and 41 38 9.75%

Spicy Tuna

Century Tuna Century Tuna 44 39 11.36%

with calamansi

Century Tuna Flakes in Brine 40 38 5%

San Marino Regular Corned 44 39 11.36%

Tuna

San Marino Chili Corned 44 39 11.36%

Tuna

Average 8.97%
Percentage
increase
Figure 8: Bar Graph comparing Cost of Production and and Price Level of Each Canned Tuna
Products

The diagram in figure 7 and the bar graph in figure 8 shows a comparison between cost

of per and overall price level per unit of each product. From these figures it can be seen that

there’s a small percentage increase in price level from cost of production, with the maximum

price increase being seen in San Marino products at 11.86%. The average price increase is also

small with it being only 8.97%, this shows that there’s a small price difference between price

level and cost of production, which further supports the idea that both companies are earning

low levels of supernormal profits and are competing through price competition.
Non-price Competition

The second method commonly used in certain market structures is non price

competition. Non-price competition is a method of competition that refers to any method that

doesn’t involve manipulation of prices. Some examples of non price competition include

advertising and promotions of one’s brand and intense product differentiation brought about by

conducting research and development (Pettinger 2019).

Product differentiation is defined as the process of distinguishing one’s product from

competitors in an industry in order to attract customers and gain their loyalty (Clifford 2020).

When it comes to product differentiation there are 3 main factors that impact differentiation:

Feature, Customization and Quality. Features refers to the exclusive features of the firm's

products that make it unique from their competitors. Customization refers to the firm’s products

appealing to different types of consumers in the market, while quality refers to the quality of

the product relative to their competitors' products. Unlike the other factors quality is subjective

in nature and based purely on the preferences of the consumers. It’s also dependent on the

features and customization of the product, therefore it can be seen that these 3 factors of

product differentiation are interconnected and impact one another (Hart, 2020).

This is why In order to determine the degree of product differentiation present in the

market, I determined if these 3 factors of differentiation are seen in the current canned tuna

market. To do this I first conducted a survey asking the 300 respondents about their purchasing
preferences when it comes to buying canned tuna products. I specifically asked about their

favorite canned tuna flavor, the figure below shows the results of the survey.

Figure 9: Pie chart showing the most popular canned tuna flavors in the National Capital
Region area

From this figure it was seen that the 9 most popular canned tuna flavors are: Regular

Tuna, Hot and Spicy Tuna, Century Tuna Flakes in Oil, Century Tuna in Water, Olive Oil, Hot and

Spicy Corned Tuna, Corned Tuna, Canned Tuna with Calamansi. I then determined if there is

some form of product differentiation present in these products.

Figure 10: Table showing characteristics of each popular product in relation to the different

forms of product differentiation

Name of Product Feature Customization

Regular Tuna Exclusive features ● Appeals to consumers

 ● Odorless and
flavorless taste
● Perfect
complementary
topping to other
meals.
Hot and Spicy Tuna Exclusive features
● Hot and Spicy taste
● Makes use of the
original canned tuna
used in regular tuna
Century Tuna with Calamansi Exclusive features
● Sweet and Sour taste
● Makes use of original
tuna used in regular
tua
Flakes in Brine Exclusive features
● Keto meal, a healthy
alternative
Regular Corned Tuna Exclusive features
● Incorporates corn into
their product
Chili Corned Tuna Exclusive features
● Incorporates spices
into to the corned
tuna in order to give it
a unique zingy and
spicy taste
Century Tuna in Water Exclusive Features
● Classic all-time
that have a
traditional, simplistic
food preference.
● Also appeals to
consumers that enjoy
adding tuna as a
topping to their main
meals without
affecting the taste
● Appeals to consumers
Who have a more
spicier food
preference
● Appeals to consumers
that have a more
sweet and sour food
preference
● Appeals to consumers
who are health
conscious and
currently on a keto
diet
● Appeals to consumers
who enjoy corn or
want something
unique/new added to
their canned tuna
meal.
● Appeals to consumers
who want something
unique added to their
canned tuna meal and
are also into spicy
foods.
● A classic flavor that
appeals to consumers
 healthy meal
● One of the oldest
vegetarian products
of century tuna
with more traditional,
simplistic taste.
● Also appeals to
vegetarian
consumers.

Century Tuna Flakes in Oil Exclusive Features ● A classic healthy

● All time healthy meal alternative that
that uses unprocessed appeals to meat
healthy meat (flakes) eaters who wanna eat
healthier protein
based meals.

Olive Oil (Century Tuna) Exclusive Features ● A classic flavor that

● Make use of olive oil, appeals to health
a very healthy conscious consumers.
alternative. ● Also appeals to
● Low in cholesterol consumers that enjoy
having olive oil added
to their meals as a
seasoning.

As seen in this table, it’s clear that different factor of product differentiation like feature

and customization is evident in the products being produced by the competitive firms (San

Marino & Century Tuna), therefore it can be said that quality which is the primary factor of

product differentiation is also evident in these products, because the unique features and

customizations of these products are bound to impact the quality of the product in the eyes of

the consumers. Because of that it was determined that there is a high degree of product

differentiation occurring in the market, since product differentiation is considered an example

of non-price competition it was surmised that this industry has a high level of non-price

competition
 Afterwards to determine which method of competition is stronger in the industry, I

conducted a survey asking the 300 respondents about the primary factor that influences their

canned tuna purchasing habits.

Figure 11: Pie chart showing the results of the question: What is the main factor that dictates
your purchasing preferences (Pricing or Quality and Taste) ? If it’s price then what is the
minimum price increase that your originally chosen firm has to do in order to stop buying
from that firm ?
 As seen in this pie chart it can be seen that a majority of the consumers indicated that

quality and taste are the main factors that dictate their purchase. Thus this shows that

non-price competition has a bigger impact in the canned tuna industry than price competition

because it has a bigger influence on the behavior and purchasing habits of the consumers.

Overall this section shows that this industry has some aspects of non-collusive oligopoly.

This is evidenced by the presence of price and non price competition. This section also

emphasizes the interdependence of this industry, as seen in our analysis pricing is dictated by

the presence of other firms. Through intense competition felt by each firm, pricing is constantly

being reduced in order to convince consumers to buy their products over their competitors.

Thus it can be seen that pricing is dependent on the presence of competitors in the market.

Besides other competitors, consumer preferences also impacts the industry because it dictates

the type of research and development and overall product differentiation occurring in the

market, through the constant shifting in taste preference of consumers, the industry has

continued to grow and develop over the years so that firms can accommodate more consumers

and grow their influence in the National Capital Region area. This is evidenced by the presence

of unique canned tuna flavors currently being sold by both competitors in the market.
Conclusion

Due to the simplicity of the market structures, to answer the research question it was

discovered that the market structure of the canned tuna industry cannot be defined to just one

structure. Perfect competition and monopolistic competition were ruled out due to the high

barriers to entry and lack of competition. The presence of a dominant firm and methods of

price and non price competition made me consider monopoly and collusive oligopoly as viable

options. However since the monopoly aspects are much more apparent and slightly outweigh

the oligopolistic features, it can be concluded that the market structure is primarily a monopoly

with some oligopolistic aspects to it. The reason for this conclusion is the clear presence of a

dominant firm which is an immediate indicator that the canned tuna industry in the NCR is a

monopoly.

Evaluation

Only 300 households were surveyed for this investigation, it would have been better if

we had gotten more participants for this study. Convenience sampling was also used which may

lead to issues involving lack of generalizability and sampling bias. Additionally the

representatives interviewed may have been biased in their answers in order to present a better

image for their companies because of that the accuracy of the interviews and the essay was

affected.

Next time in order to enhance the understanding surrounding the canned tuna industry,

the next researchers should study the effects of importers on the market structure of the
 canned tuna industry, and also its effects on the selected firms (Century Tuna and San Marino).

Besides that they could also conduct the exact same study, but using a different target area and

with smaller firms included in the study. All of this can be done so that economists can have a

greater and more holistic understanding of the canned tuna industry.

References

Llanto,G., Ortiz,Ma.Kristina., Madriaga,C. (2017).Reducing Unnecessary Regulatory Burdening:

The Philippine Tuna
Industry.https://think-asia.org/bitstream/handle/11540/7250/pidsdps1713.pdf?sequence=1

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Appendix

I. Interview Transcripts
San Marino Interview held on september 10, 2022

Interviewer: How much percent of the market do you own in the National
Capital Region Area ?

A.B : San Marino owns around 10% of the market in the National Capital
Region Area.

Interviewer: If you don’t mind me asking what was your costs, expenses, net
sales and net income last year ?

A.B : Last year San Marino spent roughly 450 million pesos in advertising
and promotion, 118 million, 23 thousand , 456 pesos on sales and operation,
1 billion, 652 million ,325 thousand 581 pesos on cost of goods sold, 28
million, 325 thousand, 581 pesos on general admin expenses, and 596
million, 348 thousand, 837 pesos on total opex.

A.B: Our net sales were 3 billion, 500 million, 750 thousand pesos.

A.B: While our net income was 155 million, 726 thousand, 764

Interviewer: What’s the cost of production for one unit of 180 grams of
regular corned tuna, and spicy corned tuna ?

A.B: Good Question, for both flavors it costs around 39 pesos to produce one
unit of each good.

Interviewer: Alright that’s it no more question. Thank you for your time !
Century Tuna Interview held on september 16, 2022

Interviewer: How much percent of the market do you own in the National
Capital Region Area ?

Mr Greg : We own around 85% of the market

Interviewer: If you don’t mind me asking what was your costs, expenses, net
sales and net income last year ?

Mr Greg : As a reference, century tuna spent roughly 1 billion, 667 million,

500 thousand on total opex cost, 217 million 500 thousand on general admin
cost, 1 billion, 160 million on sales and operations, 10 billion, 585 million on
costs of good sold and 290 million on promotion and advertising expenses.

Mr Greg: In regards to net sales we earned around 14 billion, 500 million

pesos.

Mr Greg: While for overall net income it was around 580 million.

Interviewer: What’s the cost of production for one unit of 180 grams of
Regular tuna, Hot and spicy tuna, Century tuna with calamansi and Flakes in
brine

Mr Greg: The cost of production for each one of these flavors is as follows:
38 pesos for Regular tuna, 38 pesos for Hot and spicy tuna, 39 pesos for
Century Tuna with Calamansi, and 38 pesos for Flakes in Brine. Originally
these costs were much cheaper but due to inflation it has gone up to the
values.

Interviewer: Alright that’s it no more question. Thank you for your time !