Monopoly Market In Malaysia

Economics is a study of the allocation of scarce resources in response to unlimited wants involving the theory of supply and demand. In the field of economics, the meaning could vary based on different things to different people. For economist, they used the term competitive market to describe a market in which there are plenty of different buyers and sellers in which each possess a negligible impact on the market price where the buyers determine the demand for the product, while the sellers determine the supply of it. This allows the price to change in response to the changes in the supply and demand due to the competition that existed in the market. In the case of substitution of most products, a buyer has the power of buying a cheaper

An enterprise is considered as a monopoly when it is the only firm who provide the particular services or products; this means that there is no close substitution product in the market. Examples are public utilities and professional sports leagues. Unlike the perfect competition market structure which is a market that can freely enter and exit without any barriers, according to Leftwich (1969), there are a few barriers existed in monopoly market naming licensing restriction or exclusive franchise right and the use of tariffs and quota by the government. In East Malaysia the examples of licensing restriction and exclusive franchise right in Sarawak is the Sarawak Energy and the solely Sabah Electricity Sdn. Bhd in Sabah which served as the only electrical supplier for each states. Both companies monopolized the business of electricity supply in East Malaysia. Besides, the use of tariffs and quota promote highly cost industry or business. The high tariffs caused the price of the scarce imported product to increase while quota has limited the quantities of import (Leftwich, 1969). The high cost of importation and limited quota may cause the foreign investor to step back. On the other hand, a monopoly market has the market power in manipulating the price of the products. This is because the monopoly market has no

The monopolistic market features both perfect competition and monopoly market (Mankiw et al., 2013). Monopolistic has the similarity with perfect competition market where the products and services provided by the firms are similar but slightly different which give each firm a limited control of the price of its product. As elaborated by Mastrianna and Hailstones (1995), “just as in perfect competition maximizes its profits or minimizes its losses at the point where marginal cost equals marginal revenue” (p. 129). For example, the market for instant coffee seems competitive; there are lots of different brands available on shelves in shops. However, the market for instant coffee also seems monopolistic, because each brand of coffee is unique. This is evident to why the “pricing under monopolistic competition, however, is likely to be higher than pricing under conditions of perfect competition” (Mastrianna and Hailstones, 1995, p. 129). According to Mankiew et al. (2013) the similarity of monopolistic and monopoly market are the sellers in these markets are price makers rather than price