Economic about monolopy

Presenting My

Monolopy in some industries in Viet Nam

INDEX

Monopolistic and free market

type of monolopies

Definition of monopoly

Example of industries

VietNam gasoline

Viet Nam electricity

Pros and cons

How to reduce

Team

Thanks

10

Definition of monopoly

Definition

Monopoly is the market structure that have only one seller, and only sell the unique products

The different between Monopolistic market and Free market

Monopolistic market and Free market

Monopolistic market

Free market

• Many small firms, and only sell the homogeneous products
• Have a very low barriers entry, so its very easy to entry.

• One seller
• Have very high barriers entry and its impossible to entry.
• The good don't have relative goods to replace

The comparison

- Monopoly more inefficient than Perfect competition because the resources are under allocated to the production of its product.

- The demand curve for a perfectly competitive firm is perfectly elastic and the demand curve for a monopoly firm is The market demand, which is negatively-sloped according to the law of demand

- The monopoly firm charges a higher price and produces less output than would be achieved with a perfectly competitive market

- While an economic profit is NOT guaranteed for any firm, a monopoly is more likely to receive economic profit than a perfectly competitive firm.

- The positively-sloped marginal cost curve for each perfectly competitive firm is its supply curve.

Main type of monolopies in industries in Viet Nam

monopoly is the result of administrative mechanism ( State monopoly capital )

Monopoly is the result of competition in the market ( Monopoly Capitalism )

- Free competition gives rise to agglomeration and concentration of production - Agglomeration and concentration of production develop to a certain extent, leading to monopoly.

- Some firms unable or unwilling to do business because of the large investment - To ease the conflict between the rich and the poor

VS

4. Some State-owned business monopoly

Production of gold bars

Printing and minting money

Issuing the lottery

Management, maintenance and operation of post and telecommunications networks

Flight Operation Guaranteed

Transmission and dispatching of the national electricity system

2 example of monolopy in indutry in Viet Nam

Vietnam Oil and Gas Groupn ( PVN )

Vietnam Electricitу ( EVN )

Current status of Vietnam gasoline

-- The petroleum market in Vietnam is currently an exclusive market, it is not possible to establish a mechanism according to the law of supply and demand of the market - Strongly affected by world gasoline prices and constantly fluctuating prices. - ot really according to its “market” nature, it seems that Vietnamese petroleum exists a “monopoly”.

Introduce Petrolimex

- Vietnam Petroleum Corporation (Petrolimex) currently has 41 member companies, 34 branches, and factories affiliated to 100% state-owned member companies, 23 joint-stock companies with capital contributing to the cost of the corporation, 3 joint ventures with foreign countries and has a branch in Singapore

"- Currently Petrolimex is one of the largest corporations in our country and has a key role in the petroleum market in Vietnam.

- There is never competition in such a context. Obviously here Petrolimex has become a giant, monopolizing the Vietnamese petroleum market.

The petroleum business is the main business of Petrolimex

The reason why gasoline is still be affected by monopoly

• 11 State-owned enterprises that are trading in petroleum imports sold in the domestic market with about 12,000 petrol retail stations (petrol stations). Of these, 6,000 are Petrolimex.

• Petrolimex's market share of up to 60%
• Foreign investors have not yet been able to enter the domestic market.

Vietnam Petroleum Corporation (Petrolimex) annual report

Consequently

17.7%

- Petrolimex makes domestic oil prices sold much higher than the international oil prices. - Exploiting dry oil sold at low prices and importing refined rich at many times higher prices from other countries.

Higher than Malaysia

SOLUTION

Monopoly check competition in more than one way

Anti Trust Legislation

Organised Consumer’s Associations

It will see that those who come in the competition are discouraged. Their resources of supply are cut, and the suppliers are bribed, and so on.

method of checking and controlling monopoly is that the Government should help in the formation of consumers associations.

These trusts are of course voluntary, but all the evils of monopoly more or less creep into it, with the result that the State is forced to take legislative measures.

Vietnam electricity

In transmission and distribution

- EVN holds the key: it has only recently integrated state management activities in the sphere of energy - Executing economic functions as a public enterprise with the function of electricity distribution.

Monopoly in pricing

- People and businesses are required to buy electricity at EVN's regulated price while EVN supplies electricity. - Many flaws and deficiencies remain in the service and supply quality.

The demand for electricity

The demand for electricity has increased too quickly (about 15-17%) in the past few years back. In 1995, Vietnam's electricity consumption averaged about 156 kWh per person per year. During 1996-2004, consumption tripled, to 484 KWh

Consequence:

1. Massive power cuts
2. Increased costs for businesses
3. When it was necessary to meet a large-scale power shortage, EVN leaders bought electricity from China in bulk in 2005-2007 while that resource could be focused on developing domestic power sources.

the price of electricity from China is forced up very high and EVN really does not guarantee the necessary energy security

Solution

Restructuring Vietnam's electricity industry, attracting the participation of investors and energy companies to create a healthy competitive environment in the electricity industry

The separation of power generation

transmission

distribution stages from EVN are the basis for the electricity price of each stage which accurately reflects the cost of that stage, which means attracting investment in the electricity industry.

The pros and cons of State monopoly capital

Pros

Cons

• Resulting in the loss of social benefits
• The price has been raised
• Users have limited options
• Transparency is lacking
• Goods and service supply is limited, undiversified, lacks competition, and is unfair.

• Attract investors
• Have a large capital
• Protecting high privacy, promoting invention, research and development
• Can develop in a concentrated way, using resources more efficiently than the competitive market

VS

The negative side of state monopoly capital

Monopolies can boost prices while simultaneously providing poor products

They have complete control over the price

Monopolies remove any motivation for a company to innovate or offer "better" products

Monopolies are the source of inflation

How to reduce the monopoly

The goverment should

EVN's other ten subsidiaries will be split up to establish independent energy firms

To form two fully different businesses, split ownership of EVN (power generation unit) and EVNNPT (power transmission unit)

Amend Section 4 of the Electricity Act to remove the monopoly provision

TEAM MEMBERS

Cao Việt Thành

Vũ Khánh Duy

Phạm Văn Thắng

Nguyễn Văn Thành Hưng

• Find information about the pros and cons of monolopy

• Make powerpoint

• Find information about how to reduce monopoly

• Find information about Viet Nam gasoline
• Find information about EVN

THANKS!

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