Monopoly

Electricity plays a very important role in our life which means we will often use electricity. If there is no electricity, it will make a lot of electrical appliances are cannot be used such as refrigerator, light bulb, air conditioning and other.

On the other hand, electricity has related to economic and that is monopoly. What is monopoly? A monopoly is a market structure of which a single firm producing a particular good and service. Good produced is not homogeneous but unique in nature. In other words, there is one producer that produces a product for which there are no close substitutes such as TNB, KTM, ASTRO and so on. Moreover, no other firms are allowed to enter the market due to barriers of entry.

In our country, TNB (National Electricity Board) is the sole of company to provide electricity for us so the cost of TNB in the long-run. Besides, the profits of TNB won’t be decrease because everybody needs electricity for their homes or industries. Nowadays, the electricity charges is rise and it influence people have to spend more cost to pay electricity charges. Thus, the profits of TNB will increase. TNB become a monopoly by virtue of a government directive. It is a consequence of imposition of regulation by government that makes entry of new firms unattractive or almost impossible.