In our life, electric power is very importance and this is definitely one of necessary things we use in every day. In Vietnam, there is big corporation supply electricity intended for whole region which is EVN and the marketplace of electricity in Vietnam is the monopoly. First of all, when perfect competitive market has many buyer and seller, monopoly is the market which has merely one firm offering the whole industry. As the results, monopoly creates the initial product which dose not really has close substitutes.
Of course , in monopoly, there are no companies offering essentially identical just like perfect competitive market and so has no close competition and, therefore , has the strength to influence the market cost of the product. Additionally, there are good barriers to entry from this market. A monopoly is still the only seller in its market because different firm are unable to enter the market and contend with it. How come monopoly may arise? We should consider 3 sources of boundaries. First, ways for a monopoly to happen is for a single firm to have the key reference.
EVN, for example , that own the important input to create electricity including coal and water.
Second, in many cases, monopoly arises since the Government features given one person or organization the special right to offer some good or perhaps service. The patent and copyright laws happen to be two importance examples. When using your computer, this probably uses some version of Glass windows, the main system sold by the Microsoft Firm. Microsoft utilized and received a copy from the Government. Absolutely, nobody can sell off and replicate this except Microsoft of course, if one person wants to buy a duplicate of House windows, they have to spend higher cost for this merchandise. And the previous is creation process.
When the firm has the copyright, it could raise the out put from the product and as the result cost will be lower. By the rules of source and demand, the consumers will be drawn away from the other firms. Naturally , other firms will loss profit and become kicked from the market. The firm has got the copyright will probably be come monopoly. In addition , although perfect competitive firms have to take the offered price and become price taker, monopolist organization has the market power to set the price of the product and become price manufacturer. For instance, consider the market pertaining to electricity. If perhaps in Vietnam there are many of firm
source electricity, the values of it will be lower but also in fact, there may be only one EVN supply electrical power for whole country thus even if it charge the high price people have to accept because it is impossible to get electrical power from somewhere else. Not surprising, the monopolist offers much greater industry power than any single firm in a competitive marketplace. In the case of a necessity like electrical power, the monopolist could command quite a higher price. Overall, all characteristics just like there is only 1 producer, exceptional product, solid barriers to entry, price maker collectively they make one kind of market which can be perfect competitive market.