Monopoly

TNB( Tenaga Nasional Berhad) Monopoly Electricity In Malaysia

          Monopoly is one of the marketing structures. TNB is one of the monopoly company in Malaysia. Characteristic of  the monopoly companies are they are price marker, they have high barrier to enter the market, selling unique products and make super-normal profit. TNB is only direct supplier electricity to every customers and they have ability to control the price.

          Why TNB is the only electricity company in Malaysia? That is because to produce electricity the company needs to invest huge amount of money and the risk of it is high. Government need to control the electricity price equilibrium, remain the price and avoid marketer to mark up the price. Furthermore, TNB company is operated by government and it is only have a license to operate in Malaysia. For example, have two electricity company in Malaysia, that  are TNB and HHB, customers will choose the cheaper one to be their customers, that will cause the price lost the equilibrium. Moreover, TNB have their own coal field and hydroelectric power plant to supplier TNB materials to produce electricity, it can lower down the production cost to keep the price low.

Based on the graph where production at the Marginal Revenue(MR) = Marginal Cost(MC) output. Company want to gain maximum profit, the price must set at the point X(Average Revenue) and it must above the Average Cost(AC).