The Monopoly Market Structure of the Australia Post

This article discusses the monopoly market structure of the Australia Post and its impact on small businesses. It explores the barriers to entry, lack of substitutes, and government regulation in the postal service industry.

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The monopoly market structure of the Australia Post
The market structure of monopoly is usually characterized by one seller who sells a
unique commodity or provides a service in the market. In case of the monopoly market, the
seller usually faces no competition. The reason behind this is that he is the only seller of the
services or commodities with no other close substitutes. In this type of market structure
factors such as ownership of resources, government license, copyrights or patents along with
high starting costs makes the entity the only seller of the goods (Zeuthen, 2018). The above
mentioned factors does not allow the entry of the sellers in the market. The monopolies also
possess some information which are generally unknown to the producers. This particular type
of market structure usually exists when a specific individual or enterprise is the sole supplier
of the particular commodity.
One such example of the monopoly market structure in Australia is the Australia post.
It was found out that the Australia Post had been hurting the small business becau8se it does
not allow any kind of private postal companies for delivering the parcels. According to a
report by The Australian Competition and Consumer Commission the Australia post have a
statutory monopoly over the delivery pf the postal letters which usually weighs more than
250g (ACCC role in postal services, 2018). Australia post is known to operate in the three
types of core markets which includes letters and the associated services, parcels and logistics,
agency services and the retail merchandise which span both the international and the
domestic markets. The Australia post is also known to be continuing to broaden its product
and the service range which have been invested in the technology-based infrastructure
programs. Australian Post is owned by the government who provides the postal service in
Australia The Australia post have a community service obligation for supplying a letter
service. One of the significant purposes of the letter service is carrying the letters physically
within and outside different places in Australia. It can be said that the Australia Post exercises

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a monopoly power in the carriage along with the delivery of the letters within parts of
Australia which are however subject to specific exemptions. The part of the services which
are covered by the monopoly is generally known as the reserved services (ACCC role in
postal services., 2018). The monopoly service extends to the collection of letters in Australia
including delivery within Australia. The service also includes delivery of the letters within
Australia.
Figure 1 Monopoly market structure
(source: Zeuthen, 2018).
There is presence of lot of inefficiencies in the monopoly market structure which
states that the pricing of the monopoly will create a deadweight loss since the firm will be
forgoing transactions with the consumers. The market of the Australia Post will become
inefficient and comparatively less innovative in nature as they have no one to compete with
the other producers in the market. The Australia Post can also experience market failure as a
result of abuse of power. Market failure generally take place when the price mechanism fails
for taking in to account all the costs or the benefits of providing and consuming goods
(Zeuthen, 2018). A monopoly market structure therefore can be stated as one of the imperfect

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markets. According to the report the Australia Post known to suffer its first ever loss. Some
of the characteristics of the monopoly market structure includes
Lack of substitutes: the Australia Post hardly have any substitutes for competing with
it. Therefore, the service can be termed as unique where the single firm will produce goods
without any close substitutes.
Barriers to entry: the monopoly characteristics of the postal service restricts the entry
of other private postal services. There is presence of significant barriers to entry which is
generally set up the firm.
Competition: the Australia post does not have any close competitors in the market for
the services.
Price maker: in this case the monopolist firm is the similar to the industry since there
are absence of any firms operating in the market which will make the monopolist a price
maker.
The Australia Post will be charging higher prices to the consumers every time taking
the advantage of the monopoly power (Zeuthen, 2018). They can also charge different price
for the different consumers. Therefore, there can be result of price discrimination.
The government in this case will try to intervene in the monopoly market for curbing
the market power. The government may therefore wish to regulate the monopolies for
protecting the interest of the consumers. With the help of price crapping and preventing the
growth, the government can regulate monopolies. Although the Australian Competition and
Consumer Commission have several roles to play in the postal service. Some of the key
responsibilities which the ACCC takes for regulating the postal services are administering the
record keeping rule for the Australia post, inquire about any disputes for the reserved services
provided by the Australia Post and assess notifications of the proposed prices (ACCC role in

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postal services., 2018). The Australia Post also needs to notify the ACCC when there is an
increase in the price or introduction of any new products. The government will be regulating
monopolies for preventing excess rise in price. When the firm will be having a monopoly
over the provision of the services, the government at that time will regulate and also make
sure that the firm meets the minimum standards of the service. A firm with the monopoly
selling power can also be in a position to exploit the monopsony buying power. The
government have a policy to investigate mergers which can create the power of monopoly
(Zeuthen, 2018). The government regulators will be able to analyze the quality of the
services used which are provided by the monopoly market. He can also use the method of
price capping which will save the consumers from the inefficiencies caused due to monopoly
power.

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Reference list
ACCC role in postal services. (2018). Retrieved from https://www.accc.gov.au/regulated-
infrastructure/postal-services/accc-role-in-postal-services
Zeuthen, F. (2018). Problems of monopoly and economic warfare. Routledge.