Question

Write a esei of discussion on how the astro  company achieves market equilibrium in the long-run with examples.

Answer 1

All-Asian Satellite Television and Radio Operator, which is also well known as Astro, is a Malaysian media and entertainment broadcast company. It was founded by Tan Sri Ananda Krishnan and he started its service in Malaysia and Brunei in 1996 when there is the launch of MEASAT. According to Astro (n.d), the Astro provides satellite broadcast service with 22 television channel and 5 radio stations only when they first started their broadcast service. Astro is a wholly owned subsidiary of Astro All Asia Networks plc and it is operated by MEASAT Broadcast Network Systems Sdn. Bhd.

Astro was very successful in expanding their business to all over the Asia in the past few years. They had introduced 3 types of services to run their business which is Astro B.yond, Astro IPTV, and Astro NJOI. Astro B.yond had launched the first high-definition (HD) television service in the year 2009 December. It had video recording service which obtainable through PVR and a hard disk which connects to the decoder to save the video. Apart from that, Astro IPTV is also one of the services that provided by Astro to run their business. Astro IPTV launched in April 2011. It has some advanced function from the B.yond which consists of HD channels, PVR, video-on-demand, high-speed internet. Apart from that, Astro NJOI had launched on 2012 February. At first, it is started with 18 TV channel and 19 radio stations, and the customer who consumes it need to pay onetime fees to subscribe the package. Later, they had introduced prepaid service which you can top-up to enjoy more paid channels.

In the long run, we assume that all Factors of Production are variable, which means that the entrepreneur can adjust plant size or increase their output to achieve maximum profit. Perfect Competition Long Run equilibrium results in all firms receiving normal profits or zero economic profits.

The Goods and Services Tax (GST) in Malaysia are defined as recommended code listings to grant good allocation of different goods, and supply payment and these codes are based on a normal enterprise that is commonly encountered by GST registered companies in Malaysia. GST is a kind of value added tax and replaced the Sales and Service Tax (SST) to reduce government spending in Malaysia (Mansor, 2013). GST is levied on most transactions in the production process but is refunded with the exception of blocked input tax to all parties in the chain of production other than the final consumer. The existing standard rate for GST effective from 1 April 2015 to is 6%.

Astro IPTV is in a monopolistic market structure, the downward slope of a monopolistically competitive demand curve signifies that Astro IPTV has market power in the industry. Market power allows Astro to increase their prices without losing all of their customers. When the government implemented the GST, this decrease the supply of Astro IPTV, supply curve S shift left to S+Tax the cost of production is increases, and the producers will reduce the quantity of supply.

In short, we can conclude that Astro Internet Protocol television (IPTV) market structure is in monopolistic competition market structure. To make sure we are going to a right direction we have examined and determine the characteristics of Astro IPTV market structure and the industry determine price and output decisions. We also analyze some economic issue, and implementation of goods & services tax (GST) bring the impact to IPTV market structure and Astro company.