Answer:
A monopoly market is characterised by a single seller of a product or service which has no close substitutes available and the entry of new firms is restricted in the market by some statutory laws or patent rights. On the basis of the above discussion, it can be concluded that Railways is a monopoly of the government of India because : (i) It provides rail transport which is not provided by any other operator. (ii) Rail transport has no close substitutes. (iii) Private firms cannot enter this market because rail transport in India is reserved only for the public sector. The characteristics of monopoly market are explained below: (any four) (i) One Seller and Large Number of Buyers Under monopoly, there is a single producer of a commodity. He may be alone or there may be a group of partners or a joint stock company or a state. However, there are a large number of buyers of the product. (ii) Restrictions on the Entry of New Firms Under monopoly, there are some restrictions on the entry of new firms into the monopoly industry. Generally, there are patent rights or exclusive control over a technique or raw material which prevents other firms to enter into the market. (iii) No Close Substitutes A monopoly firm produces a commodity that has no close substitutes, e.g. there is no close substitute of operating systems made by Microsoft. They have monopoly in this segment. (iv)Full Control over Price Being a single seller of the product, a monopolist has full control over its price. A monopolist thus, is a price maker. He can fix whatever price he wishes to fix for his product. Therefore, a monopolist is referred to as price maker. (v) Price Discrimination A monopolist may charge different prices from different buyers. It is called price discrimination, e.g. electricity boards charge higher tariff for commercial use than domestic use.
You need to login to perform this action.
You will be redirected in
3 sec
