TNB Monopoly in Malaysia

-






Tenaga Nasional Berhad (TNB) is one of the monopoly firm operating in Malaysia consumer market. TNB is the largest electric utility company in Malaysia and largest power company in Southeast Asia. 
TNB Headquarter, Bangsar, Kuala Lumpur


TNB Manjung, Perak


As we know, TNB is the largest electric power provider in Malaysia and it is also known as one of the monopoly firms in Malaysia. EMIS (2013) also mentioned that TNB has the license to operate the company as a monopoly firm for 21 years initially. Basically, a monopoly firm can be defined as the one and only seller or producer that sells goods or services to buyers or consumers. Since TNB is the only electricity provider in Malaysia, TNB has full control over price. Thus, TNB has the power to increase the price without any valid or reasonable reason; and they would not worry that their customers will run away. This is because there is no close substitute for a monopoly firm and the company can practice “Take it or leave it” principle since consumer does not have other choices. Another characteristic of a monopoly firm is there is a non-price competition since there are no competitors. TNB is a natural monopoly.


TNB doesn't have worry about losing their customers when they increase the price of electricity because TNB is a monopoly. TNB is the main energy provider in Malaysia because there are no close substitutes for electricity generation in Malaysia. TNB is a price maker who has total control over the price of the electricity since TNB is the only firm in Malaysia who have the authority to provide electricity. Furthermore, the consumer are not sensitive to the price changes in electricity since TNB is the only firm in Malaysia who provide electricity services; therefore, TNB has a fairly inelastic demand curve.






In conclusion, TNB is a monopoly which has the market power to charge a higher price for electricity without losing the amount of consumer since TNB has a fairly inelastic demand curve. Therefore, TNB is free to charge a higher price for electricity as long as TNB is still the only firm in Malaysia who provide electricity services.




Comments

Post a Comment

Popular posts from this blog

THE RICE INDUSTRY IS A PERFECT COMPETITION?

-
Image
THE RICE INDUSTRY IS A PERFECT COMPETITION? Perfect competition exists when there are a very large number of small firms that operating in the identical(homogeneous) product or services and none of who can be affected by the price by increasing output or restricting it because both buyers and sellers are price takers. Furthermore, the companies have perfect knowledge about costs and prices across the market. Everyone is aware of affirm of everyone else's price and has perfect information on the tastes of buyers. In a perfect competition, there are no barriers to enter. One example of an industry in Malaysia that has perfect competition is agriculture, mainly rice. So, there is several company in Malaysia that produce rice such as BERNAS SDN BHD, FAIZA SDN BHD, NINAMAJU SDN  BHD and others Figure 1: Profit maximization using average and marginal revenue and cost curves     What we can see that perfect competition is never likely to exist in reality
Read more

INDIFFERENCE CURVES AND BUDGET LINES

-
Image
An indifference curve is a line showing all the combinations of two goods which give a consumer equal utility. In other words, the consumer would be indifferent to these different combinations. Choice of goods with give consumers the same utility APPLES BANANAS 22 17 14 20 10 26 9 41 7 80 Table plotted as indifference curve Diminishing marginal utility The indifference curve is convex because of  diminishing marginal utility . When you have a certain number of bananas – that is all you want to eat in a week. Extra bananas give very little utility, so you would give up a lot of bananas to get something else. Indifference curve map We can also show different indifference curves. All choices on I2 give the same utility. But, it will be a higher net utility than indifference curve I1. I4 gives the highest net utility. Basically, I4 would require higher income than I1. Budget line A budget line shows the combination of goods that can be afforded with your c
Read more