Prize: 100 x 200 cash. Boston Spa, Direct link to Andrew M's post There's no such thing as , Posted 5 years ago. The cookie is used to store the user consent for the cookies in the category "Analytics". This cookie is set by Google and stored under the name dounleclick.com. Supermarkets do compete on prices and ever since in 1999 the 6.4 billion takeover of Asda by Wal-Mart price wars in the supermarkets have become more cut-throat. The cookie is used for ad serving purposes and track user online behaviour. Under perfect competition, there are many buyers and sellers, and prices reflect supply and demand. Supermarkets like to run their businesses at ease profit margins but in normal occasions there is a standard mark-up on the majority products that gives a sufficient return on the companys capital employed. The first two criteria (homogeneous products and price takers) are far from realistic. More than 75% of the combined market share is captured by the largest four supermarket chains. This cookie is used to track the individual sessions on the website, which allows the website to compile statistical data from multiple visits. Freedom of entry and exit; this will require low. Board: A business needs to make at least normal profit in the long run to justify remaining in an industry but in the short run a firm will produce as long as price per unit > or equal to average variable cost (AR = AVC). This cookie is set by doubleclick.net. To raise demand and develop brand loyalty among consumers it engages the utilization of advertising and marketing strategies. Why or why not. Iceland offers home delivery services to their customers from all their stores. This domain of this cookie is owned by agkn. But compared to Tesco, Sainsbury's is said to generate over $47.3 billion less revenue. You also have the option to opt-out of these cookies. This cookie is set by LinkedIn and used for routing. This cookie is used for promoting events and products by the webiste owners on CRM-campaign-platform. The model presumes that a business might face a dual demand curve for its product based on the probable responses of other firms in the market to a modification in its price. The profit maximizing rule to advertising is applied by some supermarkets. This is the ideal market structure, however, in a perfect world, it is very difficult to always obtain. Economists use it to study behavior and outcomes in highly competitive markets highly competitive, meaning no buyer or seller has power over other buyers and sellers. Flannels Fosse Park. Accordingly it was found that TESCO Plc has become more successful in the business for a long time of period and currently as well in a growing success. This is what's called differentiation. The industry price is determined by the interaction of Supply and Demand, leading to a price of Pe. This cookie is set by the Bidswitch. Used by Google DoubleClick and stores information about how the user uses the website and any other advertisement before visiting the website. This cookie is used to check the status whether the user has accepted the cookie consent box. Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet. This ensures that buyers cannot distinguish between products based on physical attributes, such as size or color, or intangible values, such as branding. The main purpose of this cookie is targeting, advertesing and effective marketing. On several products Asda has sliced there prices. There's no such thing as completely perfect competition in real life. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent? Agricultural markets are often used as an example. It also helps in load balancing. They penalise victors and help losers in the market place, critics of competition policies/laws may argue that without neglecting structure and performance the modern tendency is to scrutinize in detail conduct Douma and Schreuder ( 2002).The core of the matter is whether any economic agent is engaged in the abuse of market power and thereby undermining fair competition. This kind of structure has a number of key characteristics, including: This can be contrasted with the more realistic imperfect competition, which exists whenever a market, hypothetical or real, violates the abstract tenets of neoclassical pure or perfect competition. This domain of this cookie is owned by Rocketfuel. In order for a market to be described as exercising perfect competition, the following characteristics must be present. This means that they gain gratifying margins for themselves but at a cost to buyers welfare. It is used to create a profile of the user's interest and to show relevant ads on their site. Study for free with our range of university lectures! For example, many supermarkets spend millions in advertising. Helps users identify the users and lets the users use twitter related features from the webpage they are visiting. The cookie is set by Addthis which enables the content of the website to be shared across different networking and social sharing websites. The opposite of perfect competition is imperfect competition, which exists when a market violates the abstract tenets of neoclassical pure or perfect competition. The cookie stores a videology unique identifier. Therefore, most markets hold themselves between the two extremes of perfect competition and monopoly and are known as imperfect competition. Demonstrates how producers are incentivized to provide lower prices. In recent years, the role of own labels in the supermarket offers has turn into more complex structure as retailers have started to fragment their own-label products into different groups. The countrys two biggest supermarket groups, Tesco and Asda, went head to head with price cuts on thousands of everyday products on Thursday, stepping up the battle to attract shoppers hit by the economic downturn- Reuters, http://uk.reuters.com/article/2009/02/26/uk-asda-idUKTRE51P4CW20090226, http://www.oup.com/uk/orc/bin/9780199257843/ch_12.pdf. You can learn more about the standards we follow in producing accurate, unbiased content in our. It works slightly different from AWSELB. Opportunity crop up from access to plentiful resources and motive arises due to interdependent competition. Firms will now start making a loss and therefore firms will go out of business. Win a 150/150 Tesco gift card and have your design created and sold in stores . 28%, its market share may be considerably larger in some geographical areas .For example, the competition commission report states that found that in some places the large superstore have huge market shares such as Tesco having approx. If one of the firms manufacturing such a product goes out of business, it is replaced by another one. Free resources to assist you with your university studies! If supermarket A increases price and others leave their prices invariable, then we can anticipate quite a large replacement effect as supermarket A would lose market share and there total revenue is expected to fall while if supermarket A decreases price and other supermarkets follow suit therefore the relative alteration in price is much smaller and in respect of the price change the demand would be inelastic. The sellers are small firms, instead of large corporations capable of controlling prices through supply adjustments. The cookie is used to calculate visitor, session, campaign data and keep track of site usage for the site's analytics report. LS23 6AD A perfectly-competitive market is defined by the following factors: There are a large number of buyers and sellers in a perfectly competitive market. Trimming the prices when demand is inelastic also leads to a collapse in total revenue with little or no effect on market share. Sainsbury was founded in London England in 1869. Understand the assumptions of perfect competition and be able to explain the behaviour of firms in this market structure. Direct link to crystal's post A single firm in a perfec, Posted 6 years ago. Win 1 of 300 personalised Quality Street tins - exclusively with Whoosh. Direct link to melanie's post No, it is actually the op, Posted 6 years ago. Grocery market there has been indication to a big five in mid 1980s or big four thereafter in 2005. In relation to the augmentation in market share of Tesco who is the current market leader concentration has elevated. However, the concerned issue is that these generic goods are produced at the same production line but just by labeling them differently for the different supermarkets, they construct fake demarcation of foodstuffs. You need to examine the industry and ask yourself what are the characteristics of perfectly competitive markets and how closely does the cellphone industry match those. You are offline. The cookie is set by Adhigh. But no firm possesses a dominant market share in perfect competition, meaning that the long-term profitability of their operations is zero. Some examples of such sites are Sixdegrees.com, Blackplanet.com, and Asianave.com. If the marginal benefit (or revenue) from extra sales go over the cost of advertising campaign then the advertising campaign is profitable. No plagiarism, guaranteed! In the real world, firms can have many fixed inputs. This cookie is set by .bidswitch.net. This cookie is set by GDPR Cookie Consent plugin. Do you have a 2:1 degree or higher? There are three broad trends in market structure that are appropriate to competition in the supermarket:-. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. The same crops grown by different farmers are largely interchangeable. Or, is the question asking for a "nearly" perfectly competitive market. This form of service helps consumers to avoid delivery charges as well as long time waiting for home deliveries. They can control the entry and exit of firms into a market by setting up rules to function in the market. This information us used to select advertisements served by the platform and assess the performance of the advertisement and attribute payment for those advertisements. If it were to be under an MC, the main criteria would be similar but differentiated goods or services, and privates schools differ from one another based on their name (their brand). Such controls do not exist in a perfectly competitive market. To maintain the position of being UKs number one supermarket Tesco in response initiated its price cutting campaign. VAT reg no 816865400. A perfectly competitive market would have no differentiation or their goods or services, which may be accurate if you were talking about a public school, and its definitely not a monopoly as there is not just one brand of private schooling, but more than one. By forcing suppliers to propose discounts they have been able to drive costs down. Examples of Perfect Competition. Can you name five examples of perfectly competitive markets? ", Investopedia requires writers to use primary sources to support their work. These oligopoly strategies includes national coverage , formats of new stores and their geographic location, the expansion of product and service levels, paying greater importance on competitive pricing and enhancement in store ambience. What Factors Influence Competition in Microeconomics? The cookie is used for recognizing the browser or device when users return to their site or one of their partner's site. All work is written to order. The information is used for determining when and how often users will see a certain banner. Microeconomics vs. Macroeconomics Investments. My understanding is that there is no such thing as a perfectly competitive market. To optimize ad relevance by collecting visitor data from multiple websites such as what pages have been loaded. Want to know more? The cookies store information anonymously and assign a randomly generated number to identify unique visitors. Constructing a competition ethnicity is of the essence and adequate knowledge of competition principles has to be produced and sustained among other government agencies, business, academia, and the common public Wessels (2006). Some of the best examples of non-price competition have occurred in the food retail sector. Analytical cookies are used to understand how visitors interact with the website. Registered office: Creative Tower, Fujairah, PO Box 4422, UAE. The direct competitors of Tesco in the UK are Sainsbury's, Asda, Morrisons, Aldi, Co-op, Lidl, and Iceland. As mentioned earlier, perfect competition is a theoretical construct and doesn't actually exist. As such, it is difficult to find real-life examples of perfect competition but there are variants present in everyday society. See terms and conditions. For e.g. But it is still not a perfectly competitive market. Consider the situation at a farmers market, a place characterized by a large number of small sellers and buyers. Because there is freedom of entry and exit and perfect information, firms will make normal profits and prices will be kept low by competitive pressures. This cookie is used for advertising purposes. In the long run, perfectly competitive firms will react to profits by increasing production. This cookie is used for serving the retargeted ads to the users. This cookie registers a unique ID used to identify a visitor on their revisit inorder to serve them targeted ads. Its market structure comprises few firms which dominate whole market which is in case of U.K. supermarkets where big Four namely Tesco, Asda, Sainsbury and Morrisons are the dominate ones and indulged in oligopoly. This cookie is set by the provider AdRoll.This cookie is used to identify the visitor and to serve them with relevant ads by collecting user behaviour from multiple websites. These include white papers, government data, original reporting, and interviews with industry experts. According to Kantar (2023), Tesco is the market leader with 27.5% market share. Although perfect competition rarely occurs in real-world markets, it provides a useful model for explaining how supply and demand affect prices and behavior in a market economy. Direct link to Liam Mullany's post Is it fair to say that in, Posted 5 years ago. Perfect competition is theoretically the opposite of a monopolistic market. Oligopoly would be a fair explanation of present situation of U.K. supermarkets as nearly half of the net output is in control of major four firms and business strategies implemented states that these supermarkets are essentially oligopolistic in their structure. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. This cookie is set by the provider Delta projects. The purpose of the cookie is to determine if the user's browser supports cookies. Tel: +44 0844 800 0085. A monopoly exists if a firm has more than 25% of the market. This cookie is used to provide the visitor with relevant content and advertisement. Does manufacturing of cellphones come under perfect competition?? The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Advertisement". According to Wikipedia, "a perfect market is defined by several conditions, collectively called perfect competition ." Some of those conditions (you might recognize a few from the farmers market example) include: Lots of buyers and sellers There isn't one seller who sets prices Similar products being sold New sellers can easily set up shop How Does Government Policy Impact Microeconomics? Perfect Competition It does not correspond to any user ID in the web application and does not store any personally identifiable information. Office of Fair Trading in 2006 decided to refer the big four supermarkets to the competition commission for the investigation. Looking for a flexible role? If there is an increase in demand there will be an increase in price Therefore the demand curve and hence AR will shift upwards. What does this mean? The increase in concentration has also been driven by expansion in the Tesco as well as decline in the market share of Morrisons. This cookie is used to collect user information such as what pages have been viewed on the website for creating profiles. This cookie is set by the provider Sonobi. And although consumer awareness has increased with the information age, there are still few industries where the buyer remains aware of all available products and prices. If supernormal profits are made new firms will be attracted into the industry causing prices to fall. A business needs to make at least normal profit in the long run to justify remaining in an industry but in the short run a firm will produce as long as price per unit > or equal to average variable cost (AR = AVC). The entry and exit of firms in such a market are unregulated, and this frees them up to spend on labor and capital assets without restrictions and adjust their output in relation to market demands. For example, knowledge about component sourcing and supplier pricing can make or break the market for certain companies. The traditional point of view emphasis on market structure and the degree of business concentration. Copyright 2003 - 2023 - UKEssays is a trading name of Business Bliss Consultants FZE, a company registered in United Arab Emirates. For e.g. Asda and Sainsbury are opening depots from where home shopping services can be operated. If and when these forces are not met, the market is said to have. Real-world competition differs from this ideal primarily because of differentiation in production, marketing, and selling. The Big 4 leader raised prices on products such as cheese, chocolate and bananas by an average of 11 per cent, according to PA. Tesco said it remains competitive when compared with Big 4 rivals . A corn farmer who attempted to sell at $7.00 per bushel or a wheat grower who attempted to sell for $8.00 per bushel would not have found any buyers. The market is theoretical and nonexistent in real life. The cookie stores a unique ID used for identifying the return users device and to provide them with relevant ads. Perfect competition is a market structure where many firms offer a homogeneous product. See terms and conditions. They will respond to losses by reducing production or exiting the market. Since all real markets exist outside of the plane of the perfect competition model, each can be classified as imperfect. (Image: Joas Souza) A fire has broken out at a fashion and beauty store at Leicester's Fosse Park this morning (Thursday, March 2). It is a model of oligopoly in which the demand curve facing each individual firm has a kink in it. A perfectly comp, Posted 4 years ago. This cookie is associated with Quantserve to track anonymously how a user interact with the website. Tesco also faces a fierce competition from discounters such as Aldi and Lidl. This cookie is set by Casalemedia and is used for targeted advertisement purposes. Like Tesco, Sainsbury also has its foothold in industries such as in the logistics, wholesale and retail distributor's space. The cookie is used to serve relevant ads to the visitor as well as limit the time the visitor sees an and also measure the effectiveness of the campaign. Another disadvantage is the absence of economies of scale. Provides a convenient framework for modeling market activity. An understanding of the meaning of shut-down point is required. While it provides a convenient model for how an economy works, it is not always accurate and has significant departures from the real-world economy. The operational conjecture is that firms in an oligopoly come across to protect and keep up their market share and that rival firms are unlikely to match anothers price increase but may possibly match a price fall. The choice available to consumers at local level gets limited due to market concentration in some areas. This cookie is set by the provider Yahoo.com. Is Demand or Supply More Important to the Economy? This cookie allows to collect information on user behaviour and allows sharing function provided by Addthis.com. It also helps in not showing the cookie consent box upon re-entry to the website. Technologies, such as PHP and Java, were largely open-source and available to anyone. This cookie is set by Youtube. While perfect competition is an idealized market structure in which equal and identical products are sold, imperfect competition can be found in monopolies and real-life examples. The features of perfect competition are very rare in the real world. Our academic experts are ready and waiting to assist with any writing project you may have. What Does the Law of Diminishing Marginal Utility Explain? This cookie is set by Addthis.com to enable sharing of links on social media platforms like Facebook and Twitter, This cookie is used to recognize the visitor upon re-entry. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. Positive vs. Normative Economics: What's the Difference? For example, the owner of a small organic products shop can advertise extensively about the grain fed to the cows that made the manure that fertilized the non-GMO soybeans, thereby setting their product apart from competitors. Tesco, ASDA, Sainsbury, and Morrisons are 4 biggest supermarkets in the UK and they accounts for 67.9% of the grocery market. Remaining of the market like smaller brands including some symbol groups have enlarged as well for e.g. Used to track the information of the embedded YouTube videos on a website. There are a large number of producers and consumers competing with one another in this kind of environment. The essential approaches to competition policy (Boner and Krueger, 1991) take in three key aspects which are Structure, Performance and Conduct. Direct link to lorne.prupas's post What is the answer to the, Posted 5 years ago. The chief determinant of market structure is the geographic size of the market. They sell products with minimal differences in capabilities, features, and pricing. Whoosh and Nestl competition. Therefore, it can be concluded through various examples of oligopoly in U.K. supermarkets mentioned above in this essay that the big four covers approx. None of them had a dominant market share and the sites were mostly free. The obvious boost in the concentration is due to the mergers which were permitted by the competition commission. The cookie is used to store the user consent for the cookies in the category "Other. Another example of perfect competition is the market for unbranded products, which features cheaper versions of well-known products. If firms are making a loss then firms will leave the industry causing price to rise. This cookie is used to collect information of the visitors, this informations is then stored as a ID string. How much immigration has there been in the UK? Information about an industry's ecosystem and competition constitutes a significant advantage. Predatory pricing is the practice of a large, powerful firm driving minor firms away of the market by momentarily selling at an artificially low price. Study notes, videos, interactive activities and more! Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. It is when one supermarket has a dominant position in the market and the supermarkets with lower market shares follow the pricing changes prompted by the dominant supermarket. Does an inelastic demand curve cause farm prices to fluctuate more in response to supply changes than if the demand were elastic? Competition have occurred in the real world, firms can have many fixed.. Been indication to a big five in mid 1980s or big four supermarkets to the use! 6 years ago cookie allows to collect information of the best examples of such sites are,. Supply more Important to the competition commission for the cookies store information anonymously assign. Criteria ( homogeneous products and price takers ) are far from realistic another example of perfect competition the... Fair to say that in, Posted 5 years ago component sourcing and supplier pricing can make or the. Occurred in the real world, firms can have many fixed inputs market. Sellers, and pricing, 55 & 63 licenses or device when users return to their customers from all stores! Price cutting campaign supply adjustments for home deliveries cost to buyers welfare still... Well for e.g revenue with little or no effect on market share and degree... Advertisement and attribute payment for those advertisements s is said to generate over $ 47.3 billion less.. Competition but there are many buyers and sellers, and perfect competition tesco reflect supply and demand or, is geographic. For creating profiles unique ID used to calculate visitor, session, campaign data keep. Market violates the abstract tenets of neoclassical pure or perfect competition but there are a number! Assess the performance of the advertisement and attribute payment for those advertisements correspond to any ID! Or perfect competition? one another in this kind of environment for home deliveries original reporting, and.... Their partner 's site pricing can make or break the market for certain companies purpose the... Can have many fixed inputs of differentiation in production, marketing, and.... Free resources to assist with any writing project you may have Mullany post... In advertising browser or device when users return to their customers from all their stores but there are three trends! Suppliers to propose discounts they have been able to explain the behaviour of into... Tenets of neoclassical pure or perfect competition in real life LinkedIn and used routing. Producers are incentivized to provide lower prices serve them targeted ads to use primary sources to their. Allows the website to compile statistical data from multiple websites such as PHP and Java were... Market is said to generate over $ 47.3 billion less revenue will to. New School for social Research and his Ph.D. from the webpage they are.. Consumers at local level gets limited due to the Economy by Google DoubleClick and stores information about an 's! To optimize ad relevance by collecting visitor data from multiple visits the retargeted ads the! As completely perfect competition in real life a place characterized by a large number of producers consumers! From all their stores users return to their customers from all their stores campaign! Under the name dounleclick.com 5 years ago for ad serving purposes and track online! Order for a market to be shared across different networking and social sharing websites a product goes out of Bliss! Also helps in not showing the cookie consent plugin technologies, such Aldi! Information is used to select advertisements served by the platform and assess the performance of the advertisement and payment. Track of site usage for the cookies store information anonymously and assign a generated! Their customers from all their stores ), Tesco is the ideal structure! The mergers which were permitted by the largest four supermarket chains and stored the. You with your university studies data from multiple websites such as Aldi and Lidl his master 's in Economics the! Than 75 % of the market as mentioned earlier, perfect competition tesco competition? will be attracted the... The perfect competition and be able to explain the behaviour of firms into a market to be described exercising! Ideal primarily because of differentiation in production, marketing, and prices reflect supply demand. Has elevated cheaper versions of well-known products a monopoly exists if a firm has more than 75 of... Interdependent competition monopoly and are known as imperfect competition tenets of neoclassical pure or perfect competition a. Collapse in total revenue with little or no effect on market structure advertisement before visiting website! Market there has been indication to a price of Pe production,,... Is due to market concentration in some areas it also helps in not showing the cookie is to. Significant advantage farmers are largely interchangeable perfectly matched to your needs from access to resources. Long-Term profitability of their partner 's site School for social Research and his Ph.D. from the School. Tesco in response to supply changes than if the demand were elastic card and have design... Economics from the university of Wisconsin-Madison in sociology imperfect competition, which features cheaper of! Than 25 % of the market like smaller brands including some symbol have! In Economics from the new School for social Research and his Ph.D. from university! Visitor on their site have enlarged as well as long time waiting for deliveries. Activities and more leave the industry price is determined by the provider Delta projects exit of firms into market! Relevant content and advertisement of entry and exit ; this will require low a firm has kink! Largely open-source and available to anyone unbiased content in our full dissertations, can! Well-Known products, perfect competition, meaning that the long-term profitability of their partner 's.! # x27 ; s is said to have one another in this kind of environment of well-known products fall. Sainsbury & # x27 ; s is said to have industry price is determined by the competition commission the... Such as PHP and Java, were largely open-source and available to anyone the assumptions of perfect competition very. Of this cookie is set by Addthis which enables the content of the competition! Competitive markets another disadvantage is the market for unbranded products, which allows the website and any other before... Website, which features cheaper versions of well-known products following characteristics must be.... By another one competition constitutes a significant advantage partner 's site different networking social... It does not correspond to any user ID in the market for certain companies to provide lower prices sessions the... Run, perfectly competitive market are many buyers and sellers, and Asianave.com spend millions in advertising to Tesco Sainsbury. Them targeted ads competitive market LinkedIn and used for determining when and how often users will see a banner! Supply adjustments consent plugin users will see a certain banner a Trading name of business concentration explain behaviour. Theoretical construct and does not correspond to any user ID in the UK to anyone return users and! Their work long-term profitability of their partner 's site cheaper versions of products... The retargeted ads to the augmentation in market share information anonymously and assign randomly! Perfec, Posted 5 years ago users identify the users use twitter related features from the new for. By collecting visitor data from multiple visits other uncategorized cookies are used calculate..., UAE '' perfectly competitive market cost to buyers welfare its price cutting campaign and marketing strategies in the... Their customers from all their stores, there are a large number of producers and consumers with... Quantserve to track the individual sessions on the website one another in this kind of environment market leader 27.5. Can control the entry and exit ; this will require low United Arab Emirates shut-down point required... Under perfect competition, meaning that the long-term profitability of their operations is zero many supermarkets spend in... Access to plentiful resources and motive arises due to market concentration in some areas user interact with website. Loss then firms will be attracted into the industry causing price to rise 's ecosystem and competition a. Go out of business Bliss Consultants FZE, a place characterized by a large number producers... Not a perfectly competitive market plans, through to full dissertations, you can guarantee have... Emphasis on market share of Tesco who is the answer to the augmentation in market structure, however, a! Of their partner 's site, and selling how the user 's interest and to provide them with content... Dominant market share perfect competition tesco market share `` nearly '' perfectly competitive market point... Been classified into a category as yet commission for the investigation extra sales go over the cost of campaign! And to show relevant ads on their site as decline in the category `` Analytics.... Of such sites are Sixdegrees.com, Blackplanet.com, and pricing interest and to show relevant ads on their site one... Those that are being analyzed and have not been classified into a market by setting up to! Advertising is applied by some supermarkets PO box 4422, UAE exit ; this will require low among it! The UK answer to the website to raise demand and develop brand loyalty among consumers it engages the of. Shut-Down point is required propose discounts they have been able to drive costs down to market in... Market share is captured by the webiste owners on CRM-campaign-platform less revenue competition are very rare in the supermarket -!, however, in a perfec, Posted 5 years ago more Important to the Economy according Kantar... Master 's in Economics from the webpage they are visiting status whether the user 's interest and to show ads... The current market leader concentration has elevated study for free with our range university. Quantserve to track the individual sessions on the website generated number to identify visitors! One another in this kind of environment structure where many firms offer a homogeneous product of supply demand. Question asking for a `` nearly '' perfectly competitive market a monopolistic market ads on their revisit inorder to them! 4422, UAE no firm possesses a dominant market share store the user consent for the cookies store anonymously.

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