RI 2020 H2 Promotion Examination - Paper 1

9757/01/Promo/Y5/2020 © RI 2020 [Turn over RAFFLES INSTITUTION 2020 YEAR 5 PROMOTION EXAMINATION Higher 2 ECONOMICS 9757/01 Paper 1 Case Study 23 September 2020 1 hour 10 minutes Additional Materials: Answer Paper READ THESE INSTRUCTIONS FIRST Write your name, index number and civics class on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a soft pencil for diagrams, graphs or rough working. Do not use paper clips, highlighters, glue or correction fluid. Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question. Name: ______________________ Civics Class: ________________ Question Marks Economics Tutor: ____________ 1 /30 This document consists of 5 printed pages and 1 blank page.

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3 9757/01/Promo/Y5/2020 © RI 2020 [Turn over Question 1 Long Term Trends in Transportation Technology Extract 1: Unwelcome Concentration in the Ride-Hailing Market The Competition and Con sumer Commission of Singapore (CCCS) has issued an Infringement Decision against Grab and Uber in relation to the sale of Uber’s Southeast Asian business to Grab for a 27.5% stake in Grab in return (the Transaction). The Transaction was completed on 26 March 2018. CCCS found that the Transaction has led to a substantial lessening of competition in the provision of ride-hailing platform services in Singapore. CCCS commenced an investigation on the basis that the Transaction may have infringed the Competition Act as an anti-competitive merger. The Transaction has removed Grab’s closest competitor in ride-hailing platform services, namely Uber. CCCS has received numerous complaints from both riders and drivers on the increase in effective fares and commissions by Grab post-Transaction e.g. via a decrease in the amount and frequency of rider promotions and driver incen tives. Indeed, CCCS has found that effective fares have increased between 10% and 15% post-Transaction. Potential competitors are hampered by exclusivities and cannot scale to compete effectively against Grab. CCCS finds that Grab currently holds around 80% market share. Despite recent entry by several small players, their market shares remain insignificant. CCCS’s investigation found that strong network effects make it difficult for potential competitors to scale and expand in the market, particularly g iven that Grab had imposed exclusivity obligations on taxi companies, car rental partners, and some of its drivers. Grab’s exclusivities hamper the ability of potential competitors to access drivers and vehicles that are necessary for expansion in the market. Source: Competition and Consumer Commission of Singapore, 2018 Extract 2: Uber’s Foray into Autonomous Technology Uber has been struggling. Dara Khosroshahi’s (Uber’s CEO) goal is to get Uber to profitability