Question

1. A monopoly is an enterprise that is the only seller of a good or service. Meralco or Manila Electric Company is a perfect example of monopoly in the Philippines because it is the major distributor of electricity without major competition here in the country.

The absence of a direct competitor characterizes the monopoly market; a monopoly ultimately provides the “authority” to act in any manner deemed appropriate for its welfare despite destructive or disadvantageous to the consumers. These are the common perceptions circulating among disgruntled consumers of the power distribution business in the country which affects consumers. The company with all its rights as a monopoly, has all the power to bring inconveniences to the people if ever their desire for a price increase is not approved. What are your thoughts on this?

Answer 1

Monopoly is a market condition with just simply one seller of the commodity, no market competition, no viable substitute and thus leading to increase in prices far more tha marginal cost and thus excessive profits.

Manila Electric Co. (Meralco) made some wrong predictions which led to cost increase but the price increase for customers was way more than that indicating their greed for more and more profit and ignoring consumers.The government and Energy Regulation commission also did not had much to say or do due to authorities and freedom of Meralco by being a monopoly but Meralco or government can not be solely blamed for this.

One effective and viable solution is to eliminate the monopoly structure for vital industries like Electricity so that consumers can atleast have an alternate or so. The government should protect public interest and should ask for some transparency in such monopolies and can do maximum price ceiling.

All this might be difficult in short run but gradually can be definetly achived and is need of the hour.