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Monopoly presentation (Business & Government Relation)
Đoàn Hữu Đồng
Nguyễn Hữu Tùng
Phạm Minh Thông
Trần Phương Nam
Nhữ Đình Hoàng Nam
Trang Chấn Phong
• Monopoly is a market situation where there is a
single seller with complete control over an
• A monopoly has the market power to set its price
and not worry about the competitors.
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 MONOPOLIES
A monopoly that arises from the economies of scale, not from
• 2. GEOGRAPHIC MONOPOLIES
Geographic monopoly occurs when there is only one company that
offers a particular good or service in an limited area.
• 3. TECHNOLOGICAL MONOPOLIES
Technological monopoly occur when a good or service the company
provide is has legal protections such as patents or copyrights.
• 4. GOVERNMENT MONOPOLIES
In many cases, government pass laws reserving specific trade,
product or service for government agencies.
MAIN SOURCES OF MONOPOLY POWER
• ECONOMIC BARRIERS
1. Capital requirements
2. Technological superiority
3. No substitute goods
4. Control of natural resources
• LEGAL BARRIERS
1. 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
PRICE & OUTPUT DECISION FOR A
• The demand &
curves of the
=> A firm that faces a
demand curve and
therefore it can
choose among price &
along the demand
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.
• Charging different prices for different consumers of their
product is called price discrimination.
CONDITIONS FOR PRICE DISCRIMINATION
1. The seller must be price maker.
2. The seller must be able to segment the market
distinguishing between consumers willing to pay different
3. It must be impossible or too costly for customers to engage
EVN IS A KIND OF NATURAL MONOPOLY.
THE FIRM DOES ALL WORK FROM
DISTRIBUTION, IMPORTATION AND
EXPORTATION THE ELECTRICITY FOR
MANAGEMENT AND INVESTMENT PROJECT,
MAINTENANCE, RENOVATION, UPGRADING
ELECTRICAL EQUIPMENTS, ELECTRICAL
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 Corporation in the North (EVN NPC),
Electricity Corporation in the South (EVN SPC)
Electricity Corporation in the central (EVN
Electricity Corporation in Ha Noi (EVN HANOI),
Electricity Corporation in Ho Chi Minh City
THE REASONS THAT EVN BECOME
1. They owned all the materials and they control the production
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
The Ministry of Industry and Trade empowers EVN calculate
inputs to the base electricity price adjustment which makes this
group increased monopoly level.
Nobody can deny that electricity is quite important in our life. We
actually cannot do anything without it
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
• 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
• 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
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
• Using efficiency the energy resources in the country.
• Combined with imports of primary energy for electricity
• Provides full power with increasingly high quality.
• Supporting price for economic development – society.
• Ensuring national energy security.