TNB as a Monopoly firm!(Syahir)

Tenaga Nasional Berhad(TNB) as a monopoly firm

Hi! My name is Mohd Syahir and I am a business student from a private University somewhere in Sunway. Have you ever knew, that Tenaga Nasional Berhad(TNB) is a monopoly firm?

Well, monopoly is categorised under imperfectly competitive industry, in this industry they have the market power where they have some control over the price of their services or products. They can even increase the price without having nothing to worry about losing all demand for their services or products. As we know, TNB sells their electricity services all over Malaysia including the Peninsular and Sabah and Sarawak, TNB is the only firm that sells electricity in this country, and so far there is no close substitutes like TNB. TNB is a price maker in the market as they have the power to set prices without influencing the demands for the electricity that they provide, by doing this they can have a greater profits called supernormal profits.

Until today, there is no new firms trying to supply the same services that TNB provides. As a monopoly firm, they can set up some barriers to entry to prevent new firms entry into the market. There are some barriers to prevent new firms such as the patents or copyrights, it is the legal restriction that grant the exclusive use of the patented services or process to the firm, and they block other firms from entering the market to provide the same service. Other than that, the government directive, which have the power to make newly entry firms to be unattractive or almost impossible to survive in this particular industry. Then, there is the ownerships of scarce raw materials, TNB is the only firm that have the materials to provide the services therefore, this makes the new entry firms cant enter this market as TNB is the only firm in this industry.

According to a website www.securities.com/Public/company-profile/MY/Tenaga_Nasional_Berhad_en_1663430.html they said that Tenaga Nasional Berhad has a monopoly license to operate nationally for 21 years which 8 years remaining.