Arguments Against Monopoly

4.0 The arguments for and against Monopoly

4.1 Argument for Monopoly

• Monopolist can easily achieve economic of scale and its advantages.

Monopolist can easily achieve economies of scale to the economic expansion of enterprises at the beginning of the stage, the enterprise due to expand the scale of production and economic efficiency is improved.

Example for, Plus Berhad is easily award project of build highway in Malaysia and also potential invest in other country for similarly business.

• It is likely to have a greater incentive to spend on research and development.

Advantage of monopoly is that there is no competitors, so that their no need to promote, marketing, advertising the product or services. Some are subsided by government, then

The monopolist has a unified plan for the production and supply of the product, so it will not cause duplication of construction. For example, there is obviously a power supply factory is enough, but happens to build a power supply factory by another company and its competition, resulting in two of the total production capacity can only be used in half, which is redundant construction. 4.2 Arguments against Monopoly

• It restricts supply and raise prices.

The monopolist can extract price from consumers that is above the marginal cost of resources used in making the product or services. (Refer above chart Deadweight loss)

Example for, Astro Malaysia Holding Berhad is With a customer base of 5.0 million residential customers or approximately 69% penetration of Malaysian TV households, They simply can change or raise price with package either you like or not. And restricts supply to you if you don’t like it.

• It makes abnormal profits.

The main case against monopoly is that it can earn abnormal profit at the expense of economic efficiency. i.e refer to above example, consumer surplus turned into producer surplus (extra monopoly profit).

• Lack of competition leads to inefficiency.

Monopolies only one in marketplace no competitor, they can become inefficient and less innovative over time because they do not have to compete with other producers in a

The Competition Act comes into Gazette on June 10, 2010, and it is divided into four chapters, Part I-VI and 67 Section, including: general rule, anti-competitive agreement, abuse of dominant position, market review, exclusion, investigation and enforcement, decision by the commission and competition appeal tribunal. The enforcement of the Competition Act will carried out by the officials of Malaysia Competition Commission (MyCC) is enforced in January