Question

Private tuition centres are a big industry in Malaysia with over 450 such centres that reportedly serve more than 95% of all college students. Tuition fees can be high and some families pay a lot of money a month to send their children to private tuition. Using the theory and models of market structure, examine this industry. Should the government be worried about any aspect of how an industry with this particular market structure will perform?

Answer 1

Private tution centres can be treated as monopoly market situation. Because in the local area there is only one supplier of tution. So he can paid higher amount to the consumer. The private tution centres apply price discrimination policy of monopoly. Because they met with students from different backgrounds. They pay relatively less price or tution fee to the customer who demand more subjects for tution than the customer who demand less subjects. Also he can claim higher price in the far away places. The private tution centres can increase their price without the increase in supply of service to the customer. As a result the private tuition centre act as monopoly.

The government should interfere the industry of private tution centres. Because they act as monopoly. It will lead to exploitation of customers. It creates tensions among the society. There is no regulations from the government towards the private tution centres. There is no evidence of income from the tution. The situation creates a black economy. It will lead to inflation, tax evasions etc.