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MONOPOLY:

Mono means one and poly means seller. Monopoly is
define as it is a market with a single seller producing unique products (having
no close substitutes) and the control over price is high (regulated).

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Examples:

The
pure monopoly examples are: Water, electricity, telecommunication, public
transports.

BARRIER
TO ENTRY:

Barrier
to entry means firms face hindrance in entering new market. In monopoly, there
is a high barrier to entry means new firms find it impossible to enter in a new
market.

NO
CLOSE SUBSTITUTE:

In
monopoly there is no close substitute because there is only one firm who is
producing that particular product. So, the buyers have no choice left to switch
towards other substitutes and then they buy that particular product either on
high or low prices.

CHARACTERISTICS
OF MONOPOLY:

Followings
are the few characteristics of monopoly:

v  Monopolist is the price maker. They decide their product prices by
shaping the quantity in order to demand the price.

v  Firm can also maximize their profit by charging high prices of
their products because of lack of competition in the market. In this way they
also maximize their revenues.

v  In monopoly, there is a price discrimination which means firms can
change the quantity or prices of their goods or products.

v  There is also a single-price monopoly in which firms have to sell
their outputs on the same prices.

 

 

 

 

MONOPOLY
IN OTHER COUNTRIES:

Monopoly
is almost in every country where government put restrictions for private firms
to enter in a market. We will find monopoly in U.S, Europe, India as well. In
U.S there are some monopolist like Da Beers (supplier of diamonds), Andrew Carnegie’s Steel Company (now U.S. Steel) and the biggest
monopolist is the MICROSOFT. In India there is a monopoly in railway and
one of the biggest monopolists is ZENITH FIBRES LTD who manufacture
synthetic fiber in India.

 

MONOPOLY IN PAKISTAN:

In
Pakistan there is also a trend of monopoly where there are high barriers to
entry. Here are some examples of monopoly in Pakistan:

v  K.Electric.

v  Pakistan Railway.

v  PTCL (in landline).

v  SSGC (Sui Southern Gas Company).

v  WAPDA (Water And Power Development Authority).

K.Electric
comes in natural monopoly. Here is the brief introduction of K.Electric as a
monopolist in Pakistan.

 

INTRODUCTION
OF K.ELECTRIC:

K.Electric
is also known as (K.E). Karachi is the biggest city of Pakistan and it is also
called CITY OF LIGHTS where K.Electric is the only company in Pakistan who
involved and manage all three stages i.e.: generation, transmission and
distribution of electricity to all over Karachi, Pakistan. K.Electric provides
electricity to Karachi, which is home to over 22 million people. It is
also listed in PSX (Pakistan Stock Exchange) and now a days, its market share
price is around Rs 8.

 

Before
privatization its name was KESC (Karachi Electric Supply Company). KESC was
founded in 1913, nationalized in 1952 and then Government of Pakistan finalized
theprivatization of KESCon November 29, 2005. This company was renamed as Karachi Electric
Supply Corporationin September 2008. The CEO of the K.Electric is Tayyab
Tareen. The mission of KESC is to brightening lives by building capacity to
deliver uninterrupted, safe and affordable power to Karachi but unfortunately
they were failed to meet the requirements i.e.: why in 2009,THE ABRAAJ GROUPa
top private firm in Dubai bought power utility for equity stake in the company
and it holds 72.58% of its shares and The Abraaj Group have full control on the
company.

 

1.1 OBJECTIVE OF RESEARCH:

·        
To analyze the positive impact of K.Electric on society as a
monopolist in Pakistan.

·        
To analyze the negative impact of K.Electric on society as a
monopolist is Pakistan.

·        
To find out the performance of K.Electric on PSX.

·        
To analyze the K.Electric, how they are serving in society.

 

1.2 RESEARCH QUESTIONS:

 Q1)  What are the positive impact of K.Electric on
society as a monopolist?

 Q2)  What are the negative impact of K.Electric on
society as a monopolist?

 Q3)  What is the performance of K.Electric on PSX?

 Q4)  How K-Electric is serving in the society?

 

2. LITERATURE REVIEW:

2.1  Simpson (2005) proposed the two
theories of monopoly (economic and political monopoly) and competition. He
described its differences and similarities. Further more, he discussed that how
economic monopoly and perfect competition have destabilized economies.

 

2.2  Waren (2011) introduce the concepts of
race and cultural relations by using monopoly. He recommended the technique of
Parker Brother’s game monopoly to launch the concepts of ethnic relations and
race.

 

2.3  An overview on electricity
infrastructure in Pakistan conducted by Kafait Ullah (2013). In his paper he
explained that the production capacity has increased considerably but not
increased upto fulfill the demand. He focused the existing problems and needs
for future investment to overcome the system capacity. He also include system
face problems in his paper.

 

2.4  Establishment of the monopoly of
violence and the formation of the state developed by three researchers
Acenoglu, Robinson and Santos (May,2012). In many states of Africa, Latin
America and Asia there is a lack of monopoly of violence that is why these
researchers developed the establishment of the monopoly of violence.

 

2.5  Monopoly and productquality was
described by Mussa and Rosen (June 19, 1975). In the paper they discussed the
class of monopoly pricing problems, demand and cost conditions and also
interpret the monopoly solutions.

 

2.6  Albinger (2009), explained the
economic model for monopoly analysis in telecommunication. In 1996 the monopoly
of telecommunication ended in the United States of America. In the research
paper Albinger test his economic model to check the existence of monopoly in
the telecommunication sector.

2.7  Mosca (2006), researched on the
concept of natural monopoly. She wrote about the history of the concept of
natural monopoly. She explained the six features which gave the clear idea
about the natural monopoly and then she examined these features from a
historical point of view.

 

3. RESEARCH METHODOLOGY:

3.1 RESEARCH TYPE/DESIGN:

      The
type of research are causal and explanatory while the research design are
quantitative and qualitative.

3.2 DATA SOURCES:

Secondary data is collected to analyze the K.            Electric as a monopolist in
Pakistan.

 

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