A monopoly market
structure is an industry with only one single firm producing a product which
has no close substitute. Over the years, Malaysian Airlines is the only airline
that has been operating a direct flight from Kuala- Lumpur to Sydney, Australia.
Based on the article, Air Asia X has been waiting for the Malaysia government
to end this route monopoly as Air Asia X has the approval from the New South Whales and the
Sydney air space authority but has failed to gain approval from the Malaysian
government a few times. This is due to government has been setting up high
barriers to entry this market as Sydney is one of the major gateway for
Malaysians in term of education, tourism and as well as investments and trades.
This means that travelers, investors and students has no other options to fly
to Sydney by Malaysian Airlines. In other word, this barrier can increase the
total revenue of the government as Malaysian Airlines is the national carrier
of Malaysia. After several delays, Air Asia X route from Kuala- Lumpur to
Sydney has finally been approved by the Malaysian government and the air space
authorities in the earlier April 2011. Now Air Asia X is operating 6 flights a
week for the Kuala- Lumpur to Sydney route.
Sources:
Entry By. Jonathan Kok
What goods or products do monopoly firms sell... ?
ReplyDeleteThey only sell non homogenous products
ReplyDeleteWhat are the examples of homogeneous products.. ?
ReplyDeleteHomogenous products are basically identical products. They may not look exactly the same as they have different packaging but the tend to look same through buyers eye. A good example will be fruits and vegetables.
ReplyDeleteWhat is the objective for Monopoly firms to set up high barriers? What are the example of barriers in general?
ReplyDeleteThese barriers to entry prevent other firms from entering the industry to compete for profits.
ReplyDeleteTo preserve a monopoly, it is essential to keep potential rivals out of the market by setting barriers to entry
Types of barriers to entry include:
Patents/Copyright
Economies of Scale
Large initial investment
Government directive
Ownership of scarce raw materials