Monopoly Market Structure of Australia

Running head: ECONOMICS
Economics
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ECONOMICS
MONOPOLY MARKET STRUCTURE OF AUSTRALIA
Introduction
The features of monopoly suggests there is a single seller of the commodity, absence
of any substitutes, restricted entry and they are also the price maker of the industry. The
monopoly market structure is such that the producer usually does not faces any competition
in the market because he is the sole seller in the market. As the producer is the sole seller in
the market, therefore there is a presence of restrictions for the entry of other sellers in the
market. In case of monopoly market structure, the firms will be enjoying abnormal profits
since, price of the commodities are not determined by the market forces of demand and
supply. They are usually determined by the sole seller and for this reason the particular
company will be enjoying abnormal profits for quite a long time.
In this particular topic, as an example it can be said that the Australian Postal
Corporation exercises monopoly power. The Australia Post is basically owed by the
government which is known to provide postal services to the government. The head office of
which is located in Melbourne. According to the Australia Competition and Consumer
Commission, it have been found out that Australian Post have a statutory monopoly over the
delivery of letters which weighs less than 250 gram and does not cost more than $2.40 for
sending (ACCC role in postal services. 2018). Therefore it can be said that one of the most
use example of the monopoly market structure of Australia is the Australian Post. Australia
post had hurt some of the small business since it will not allow any kind of private postal
companies in order to deliver the parcels. The Australia Post is usually operates in various
types of markets which comprises of letters with the associated services, agency services,
logistics, parcels and also retail merchandises which are present in both domestic and

ECONOMICS
international markets. The Australia post is government owned who is known to provide the
postal services in Australia. The Australia post will widen its products and services which
needs to be sold. The government should be therefore should be investing in the technology
based infrastructure programs. Australia Post provides the postal services to Australia and it
is also obliged for supplying the letters in Australia. One of the important purpose of the
Australia post letter service is carrying the letters physically to various places of Australia.
Therefore, this particular postal service have a monopoly power in the carrying the letters and
delivering the letters to different parts of the country.
Analysis
The part of the service which usually exercises the monopoly power in the carriage is
termed as the reserved services. The monopoly power comprises of the collection go letters in
Australia which also includes delivery within Australia. However, the service also comprise
delivery of letters within Australia. The monopoly market structure of Australia includes lots
of inefficiencies in the market which states that the pricing of the monopoly will be creating a
deadweight loss as the firms will be forgoing transactions with the consumers. The
inefficiency will be taking place since they will less innovative in nature as the Australia post
will be having no one to compete with them. This will be leading to market failure. The
market failure is such an economic situation which is defined by the inefficient distribution of
services and goods. The general equilibrium of economics states that monopoly will lead to
deadweight loss me the economy and can restrict supply (ACCC role in postal services.
2018). For this reason there will be shortage of goods or services leading to market failure.
Therefore, as a result of abuse of market power the Australia post will be experiencing
market failure. For all the above reasons, monopoly market structure is stated to be the
imperfect market.