Cao S nơĐoàn H u Đ ngữ ồ

Nguy n H u Tùngễ ữPh m Minh ThôngạTr n Ph ng Namầ ươ

Nh Đình Hoàng NamữTrang Ch n Phongấ

MONOPOLY

• Monopoly is a market situation where there is a single seller with complete control over an industry.

• A monopoly has the market power to set its price and not worry about the competitors.

MONOPOLY

FEATURES OF MONOPOLY

• 1. SINGLE SELLER• 2. NO COMPETITION• 3. UNIQUE PRODUCT• 4. PRICE MAKER• 5. DIFFICULT ENTRY OF NEW FIRMS• 6. OWNSHIP OF A VITAL RESOURCE• 7. LEGAL BARRIERS• 8. ECONOMIES OF SCALE

TYPES OF MONOPOLY• 1. NATURAL MONOPOLIESA monopoly that arises from the economies of scale, not from government actions.

• 2. GEOGRAPHIC MONOPOLIESGeographic monopoly occurs when there is only one company that offers a particular good or service in an limited area.

• 3. TECHNOLOGICAL MONOPOLIESTechnological monopoly occur when a good or service the company provide is has legal protections such as patents or copyrights.

• 4. GOVERNMENT MONOPOLIESIn many cases, government pass laws reserving specific trade, product or service for government agencies.

MAIN SOURCES OF MONOPOLY POWER

• ECONOMIC BARRIERS1. Capital requirements2. Technological superiority3. No substitute goods4. Control of natural resources

• LEGAL BARRIERS1. Legal rights provides opportunity to monopolise market.2. Patens and Copyrights.

ECONOMIES OF SCALE

• In some industries, the larger the scale of production, the lower the cost of production.

• As a firm becomes larger, it costs per unit of output is lower compared to a smaller competitor.

• Entrants are not able to enter the market because the very large volume of product and service of the incumbent firm.

• For Example : Electric power company or other similar utility providers.

PRICE & OUTPUT DECISION FOR A MONOPOLIST

• The demand & Marginal revenue curves of the monopolist are downward sloping.

=> A firm that faces a downward sloping demand curve and therefore it can choose among price & output combinations along the demand curve.

The monopolist always maximizes profit by producing at a price on the elastic segment of its demand curve

MONOPOLY IN LONG RUN

• If the positions of a monopolist’s demand and cost curves give it a profit and nothing disturbs these curves, the monopolist will earn profit in the long run.

PRICE DISCRIMINATION• Charging different prices for different consumers of

their product is called price discrimination.

CONDITIONS FOR PRICE DISCRIMINATION1. The seller must be price maker.2. The seller must be able to segment the market

distinguishing between consumers willing to pay different price.

3. It must be impossible or too costly for customers to engage in arbitrage.

EVN & MONOPOLY

EVN IS A KIND OF NATURAL MONOPOLY.

THE FIRM DOES ALL WORK FROM PRODUCTION, TRANSMISSION, DISTRIBUTION, IMPORTATION AND EXPORTATION THE ELECTRICITY FOR MANAGEMENT AND INVESTMENT PROJECT, OPERATION, REPAIRATION, MAINTENANCE, RENOVATION, UPGRADING ELECTRICAL EQUIPMENTS, ELECTRICAL WORKS.

EVN IS A SINGLE SELLER

EVN has total 3 companies (GENCO 1, 2, 3) in the fields of producing electricity.

They also have 5 companies of trading electricity

Electricity Corporation in the North (EVN NPC), Electricity Corporation in the South (EVN SPC), Electricity Corporation in the central (EVN CPC),

Electricity Corporation in Ha Noi (EVN HANOI),

Electricity Corporation in Ho Chi Minh City (EVN HCMC).

THE REASONS THAT EVN BECOME MONOPOLY

1. They owned all the materials and they control the production

process.

2. Currently, many companies apply on the electricity market such as EVN cooperation,

3. Petro Vietnam,

4. Coal and Minerals of Vietnam (Vinacomin)

5. The independent power producers (IPPs) and BOT projects abroad

Policy : The Ministry of Industry and Trade empowers EVN calculate inputs to the base electricity price adjustment which makes this group increased monopoly level.

Unique product 

Nobody can deny that electricity is quite important in our life. We actually cannot do anything without it

Price maker: EVN has the right to make the decision on the price changed independently. Electricity prices have increased, but never decreased. Even if full of factors that may reduce the price of electricity, such as the period increased capacity of the hydroelectric plants during the rainy season, reduce losses, reduce operating costs competitive electricity market, never been considered

PRICE DISCRIMINATION

• Ministry of Industry and Trade has adjusted the electricity rule:

• Electricity prices apply on different areas, areas with different socio-economic conditions, the government wants to make sure that the balancing of benefit the customer will receive when they use electricity .

• The Ministry proposed EVN cooperation to support, adjust the price and create more condition for difference electric manufacture that using renewable energy.

• The retail price of electricity in rural, mountainous and island has been connected to the national grid will be considered and they will have a suitable prices.

The demand curve of monopoly The demand curve of the firm is also the demand curve of the market

SALE REVENUES & SHORT TERM PLAN

• According to the latest report from the Ministry of Industry and Trade, the total revenue of EVN cooperation is 157,000 billion.

• During 11 months of 2013, total revenues from electricity sales of EVN at about 156 978 billion, increasing 21.06 % over the same period last year .

• According to the recent report, the liabilities of EVN is 103.194 billion less revenue than the moment of EVN is 156 978 billion. Therefore, the debt of foreign investors that EVN has to pay was 99 260 billion.

• According to the economic rule from the government, EVN is allowed to raise electricity prices by 7% , revenues from electricity sales

LONG-TERM PLAN

• Using efficiency the energy resources in the country.

• Combined with imports of primary energy for electricity production.

• Provides full power with increasingly high quality.

• Supporting price for economic development – society.

• Ensuring national energy security.

OTHER INVESTMENTS OF EVN

Thank You For Listening !!!