Question

Give an example of a real-world monopoly or a firm close to being a monopoly. Discuss what you think is the source(s) of its market power. For instance, do you think this is an example of a cost-based monopoly or is there some other explanation, such as advertising or network effects, etc.

Answer 1

If we consider Railways as a business, Indian Railways is a monopoly

Indian Railways (IR) is an Indian railway company. Indian Railways, until recently, had the power of railway management in the country. It is one of the largest and busiest railway networks in the world, transporting just over six billion passengers and nearly 750 million tons of cargo annually. IR is the world's largest commercial or service provider, with more than 1.6 million employees.

Few developed countries like the USA have trains run by companies historically. This model has not been able to make the railway line in the USA as fast as China or Japan or the European countries where governments manage the railways. In France, Germany, Italy, etc., only trains are provided to private operators while railway infrastructure is still in the hands of government departments or companies under Monopoly in these countries. China being a communist country (as well as Russia), the trains are completely controlled by the government.

In India, trains will continue to be managed by the government and railway infrastructure such as trains, stations, production units for trainers, repair depots, etc.

Rolling stock still holds 100 percent in the government but will change over time as IR invites independent players to work in a few categories saying about 1% of the 150,000 of the 12000 passenger lanes currently used by Indian railways. The State will continue on the railway line as there is no other model in the world that is independent and also effective.

If we consider Transport as a business, its very close to being a monopoly

Its a cost based monoply