The Largest Monopoly in Malaysia. Astro

In other countries, television shows and channels come as their own as they present themselves. For example, in California, if you flicker through the tv, you’ll find HBO, ESPN and Nickelodeon. However, in Malaysia, if you flick through our local tv station, you’ll find channels like TV2, TV3 and NTV7, hardly appealing at all. One thing that you could find in almost every household in Malaysia other than water and electricity is Astro. 

Thanks to Astro, we are able to get international channels through out the world, for a monthly modest fee of course. After all, they do have to recoup for the satellites that Astro have sent up into space. The MEASAT 1, is the first thing, alive or not, to be originated from Malaysia to escape from our atmosphere. After that, Astro further launched 2 more satellites, the MEASAT 2 & 3. With this advantage, Astro was able to monopolize Malaysia’s television industry. Using this to their benefit, Astro is able to increase their prices and the demand would not drop as Astro has sort of became a necessity for the Malaysian people, giving them an inelastic demand. However, from all the complaints about Astro being too expensive and providing unnecessary channels, the people still have the choice to choose to buy the package of channels they want and unsubscribe the channels that they do not wish to possess.

  

Other than the barriers to entry, it is very difficult for any new tv satellite company to challenge Astro’s monopoly in Malaysia because of Astro’s longevity, as they have been dominating the local tv’s here for 17 years (as by 2013). Companies dream of monopolizing any market of any region mainly due to its advantage of high profits. For the year 2012, Astro enjoyed revenue of RM3.2billion.

Astro also enjoy the reimbursement of economies of. Astro's subscribers are as lofty as 3.1 million clients, which makes Astro to have inferior average cost in production.

PED. Price Elasticity of Demand.

Companies emphasize a lot on the price elasticity of demand when determining the prices of their products. Companies with products that are proven to have an inelastic demand could increase the price of the product without risking a fall in demand. However, companies with products that have an elastic demand, increasing prices are not a good idea as it may result in a decline in the revenue.

For example, if Milo, decides to increase their price for their product, their demand would not fall, on the other hand, if, for example, Adidas, increase their prices for the equipment, the customers might move to Puma or Nike as the demand for Adidas are elastic.

The price elasticity of demand for products that are considered primary or common as substitutes are easy to find, for example, if Spritzer increase the price for the bottled water, people might start buying Evian as water is common and substitutes are not hard to find.

Price elasticity of demand also has a direct reason for the government for having taxes on goods and services. The best example of this is the tax on tobacco. Cigarettes have an inelastic demand, even though it is not encouraged, people still smoke. So, taxing cigarettes would not hurt the demand for them and the government would still get their overall revenue without damaging the tobacco industry. However, if the prices keep increasing, people might eventually find substitutes as tobacco companies have many alternatives. 

The rice industry, a perfect competition?

Perfect competition exists when there are a very great number of small companies operating in the same or very analogous commodities or services, and none of who can be affected by the price by increasing output or restricting it. 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. Nowadays as a lot of countries today store up oil as an insurance stratagem to defend themselves during times of crisis, several developing-market countries, particularly across Asia, have their own government-mandated urgent situation rice reserves.

You can see that perfect competition is never likely to exist in reality due to mainly the barriers of entry. Another industry is said to be perfectly competitive is the petrol industry, but usually it isn’t the case. The barriers to entry are enormous in terms of capital expenses, digging, franchise and many more.

The nearest we get to perfect competition in the developed world will be car auctions, antique markets, hens' egg sales and so on. Maybe, a considerable street or an extensive market for fruits and vegetables, it will be quite near to being a perfect competition. Stocks, whether it is the exchange or government stocks, they could be mentioned as being close to a perfect competition. The reason for this due to the fact that most traders are very well informed and no single trader can affect the market price. 

Babysitters, babysitters and babysitters? Where are they?

In this decade, the demand for babysitter has been more than what it used to be contrasting to what it was 20 years ago when the supply of babysitter was less scarce than what it is right now. These days, teenagers just occupy themselves with activities and hanging out with friends instead for volunteering to babysit. Its hard to find babysitters nowadays, therefore the whenever parents do manage to get a babysitter, the power of fees charge will be slightly more advantageous for the babysitter as demand is more than supply. 20 years ago there were 33 million children who needed to be watched, and 39 million babysitters (age 10 - 19), recent polls suggest that children that need to be watched raised 18 percent to 39 million while baby sitters dropped 5 percent to 37 million. Baby sitters are making a minimum wage of RM 20 an hour because they are in demand, and in short supply; the babysitters who are trained in CPR, diner, and drive are the hardest to come by and can haggle for higher wages. Due to the noncompetitive work force, this gives the babysitter the advantage of better getting the pay the want. This could be considered as inflation in the babysitter market. We also see that the most experienced, oldest, responsible, and best trained babysitters set the highest prices by up RM 40 an hour. By paying that extra amount however, the expectation of the parent will considerably be high as they expect the service they are paying for. The figure below is a graph of supply and demand. 

Oligopolies in Malaysia

Oligopolies are when few companies dominate the markets in the country. In the UK supermarket industry, Tesco, Sainsbury and Asda own the market there. In Malaysia, the perfect example would be Maxis, Celcom and Digi who dominate the telecommunication market. One of the components of a market that is oligopoly is that the giants fiercely compete on the price, so they can try to attract a larger share market than their competitors. This could be said as having price wars, for example, in 2012, Maxis introduce a cheaper prepaid and IDD packages amongst the foreign workforce with appealing price rate but Celcom, launched the Celcom First Voice Plan to assist the group broaden its subscriber foundation. Therefore, Maxis, Celcom and Digi are 3 large companies mainly just rivaling one other in the telecommunication market with rarely any regards to other telecommunication companies like U-mobile. This is considered as oligopoly.  However, in some rare cases, the 3 companies would decide to cooperate with each other instead of competing. One of the main reasons they would decide to cooperate is to assume their control on the market and benefit from supernormal profits in the long run. This will lead to inflation. Other than that, the rivals would also choose to work together to prevent new companies to enter the market, as well as there are high entry barriers which is caused by the copyrights, patents of the companies, advertisement and the economies of scale.