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Understanding Monopoly Markets in India

This document is a study on monopoly markets submitted by Reda Tayyaba. It defines a monopoly market as a situation where there is only one seller of a commodity and no close substitutes. It then provides examples of monopoly markets in India such as electricity companies, railways, and oil marketing companies. The document discusses the merits of monopoly markets, including avoiding wastage, economies of scale, price discrimination to help the poor, and investment in new technology. However, it also notes the demerits, such as poor service, lack of consumer choice, potential for high prices and low quality goods due to lack of competition.

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95 views4 pages

Understanding Monopoly Markets in India

This document is a study on monopoly markets submitted by Reda Tayyaba. It defines a monopoly market as a situation where there is only one seller of a commodity and no close substitutes. It then provides examples of monopoly markets in India such as electricity companies, railways, and oil marketing companies. The document discusses the merits of monopoly markets, including avoiding wastage, economies of scale, price discrimination to help the poor, and investment in new technology. However, it also notes the demerits, such as poor service, lack of consumer choice, potential for high prices and low quality goods due to lack of competition.

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tayyaba reda
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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A Detailed study on the topic –

MONOPOLY MARKET
Submitted by

Reda Tayyaba

Roll no.41 – BA.L.L.B (self finance)

Faculty Of Law

Jamia Milia Islamia, New Delhi-25

2017
MONOPOLY MARKET
The word Monopoly has been derived from the combination of two words i.e. , ‘Mono’ and
‘Poly’. Mono refers to a single and Poly to control.

In this way , monopoly refers to a market situation in which there is only one seller of a
commodity. If there is to be a Monopoly , the Cross Elasticity of demand between the product of
the monopolist and the product of any other seller must be very small.

In a monopoly market, the seller faces no competition, as he is the sole seller of goods with no
close substitute. ... He enjoys the power of setting the price for his goods.

For a true monopoly to be in effect, each of the following characteristics would typically be
evident:

 A sole provider of a viable product or service.

 A lack of any close substitutes for consumers to choose from.

 High barriers to dissuade the entry of any potential competitors.


MONOPOLY MARKET IN INDIA-

In India we can see various various fields where monopoly market system exists that too in a
very effective and efficient manner . Some of the examples of a Monopoly Market would be as
given below –

1) Majority of electricity companies


2) Railways
3) Oil marketing companies - IOCL, BPCL, HPCL all of them government companies.
4) BMTC in Bangalore
5) Local cable operators: before DTH there was no option if you didn't like the services of
you cable operator. All of them have their defined territory.

Thus we can see that Monopoly Market has its own importance and working efficiency in
respective surroundings .
MERITS OF MONOPOLY MARKET-
Let us look upon some major advantages of a Monopoly Market .
1. Monopoly avoids duplication and hence avoids wastage of resources.
2. A monopoly enjoys economies of scale as it is the only supplier of product or service
in the market. The benefits can be passed on to the consumers.
3. Monopolies may use price discrimination which benefits the economically weaker
sections of the society.
4. Monopolies can afford to invest in latest technology and machinery in order to be
efficient and to avoid competition.
5. Source of revenue for the government- the government gets revenue in form of
taxation from monopoly firms.

As we have above , monopoly market has a varied range of advantages for its
customers . It provides with many useful features that are enjoyed by all of us on a
daily basis for the smoother sustainity.
But with all these advantages , there are some disadvantages related with monopoly
market too . Every market or organisations has its own merits and demerits which
comprises it . Below mentioned are some of the major disadvantages of a monopoly
market .

DEMERITS OF MONOPOLY MARKET-

1. Poor level of service.


2. No consumer sovereignty. A monopoly market is best known for consumer
exploitation. There are indeed no competing products and as a result the consumer
gets a raw deal in terms of quantity, quality and pricing.
3. Consumers may be charged high prices for low quality of goods and services.
4. Lack of competition may lead to low quality and out dated goods and services.
.
A monopoly produces significantly greater output than smaller firms in perfectly
competitive market. ... Consequently, it ought to lead to greater amounts of output
for the firm as well as lower prices for consumers compared to perfect
competition.

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