1. Aims
The aims of researcher are to:
Get a better understanding of the concept of monopoly.
Get an understanding of how Monopolies are regulated
Get an understanding of how familiar the residents are with the concept of Monopolies.
2. Objectives
The objectives of the research are to:
Define and outline the characteristics of monopolies.
Identify different monopolies in Jamaica and its effects on the citizens of Top Alston
Examine how monopolies like the Jamaica Public Service Company are formed.
Discuss the measures put in place by the government of Jamaica to regulate monopolies.
3. Methodology
Methodology refers to a system of methods used in a particular area of study or activity:. The
information for this research piece was obtained from both primary and secondary sources.
Primary sources are documents or recordings or other sources of information that were created at
the time period that the study was done while secondary sources are sources that contain
information about events that have passed. The primary sources used include a
questionnaire,containing 10 questions that was issued on Sunday, January 31, 2016 and collected
on Monday,February 1,2016 and a interview of a resident on Monday,February 1,2016. A
questionnaire is a set of printed or written questions with a choice of answers, devised for the
purposes of a survey or statistical study. It was issued to 20 persons: 13 female and 7 male. An
Interview is a meeting of people face to face, especially for consultation.
The researcher chose to use a questionnaire and to do an interview so that there would be a more
personal feel to the School Based Assessment instead of getting the information from secondary
sources that could have been corrupted by human error. All questionnaires were done and were
collect by the researcher. The secondary source used was a Economics Text Book for CXC. The
researcher also chose to use a secondary source so that the researcher could have real
information instead of any biased information.
The researcher faced many limitations when this research piece was been done. Some of
these included finding people willing to participate in the questionnaire, getting the
questionnaires after the participants were finish and also finding the funds to print the entire
School Based Assessment including the questionnaire.
4.
5. Description
According to, Hosein and Stanlake (2007) a monopoly is a market structure which can be
defined ad having one seller who sells a product or service which is not offered by anyone else.
The characteristics of a monopoly are that the firm is price maker which means that that they can
dictate the prices because there are no substitutes, there is no competition within the market;
there are high barriers to entry of new firms these barriers may include product differentiation,
institutional barriers and licensing restriction and the firm is an inefficient user of production
resources. Product differentiation refers to the buyer identifying the brand name of the firm with
the product; institutional barriers are erected by the government.
A local monopoly includes the Jamaica Public Service Company. JPS is a monopoly as it
is the sole provider of electricity in Jamaica. Because it is a monopoly the JPS makes its own
prices and so it negatively affect the residents. Some ways in which it negatively affects the
residents include: the inability to provide for their families after paying their bills, inability to
pay other bills after paying their JPS bills an These monopolies, like the JPS Co. are created in
many different ways. Some of these include forming a cartel, by law, by competition, by mergers
and amalgamations and by the ownership of scarce resources. When monopolies are formed by
law then they are given monopoly powers by the government and so it becomes illegal for other
firms to enter the industry or the law can grant the holders of the sole rights to supply the
products they have patented.
Amalgation, according to the Oxford Dictionary is “the action, process, or result of
combining or uniting “and a mergers refer to “a combination of two things, especially
companies, in to one “. So when an industry is made of a few large firms then all these firms can
6. be combined or merged and so a Monopoly is formed. When there is fierce competition between
firms in an industry then the weaker ones will be driven out the industry by the competition.
A cartel is an organization created from a formal agreement between a groups of
producers of a good or service, to regulate supply in an effort to regulate or manipulate prices. So
these firms agree to restrict their output to a agreed amount of output. Monopolies are formed by
through the ownership of scarce materials. If a company owns a large amount of a certain
deposit. The Government has to put regulations in place to control monopolies so that they do
not abuse their powers. Some of these include limit of price increase, regulation of quality
service, merger policy and breaking up monopolies. If the Government thinks that firms can
make a suitable profit and is charging its consumers too much then the government will set a
price an amount by which the firm has to cut prices. For the quality of service the regulator must
examine the service provided by the firm and find out if the customers are being treated with
respect and are being provided with excellent service. Merger policies which create monopolies
are investigated by the government so it can choose to allow or deny the merger. If the
government thinks that a monopoly is becoming too powerful it may choose to ‘break up’ this
monopoly.
7. Analysis
Figure 1
Figure 1, shows the characteristics of Monopolies that the residents are familiar with.
These include no substitutes no Competition, the firm is a Price Maker and there are high
barriers to entry. 50% of the residents are familiar with the characteristic that says there are no
Substitutes while 20% are familiar with the no Competition characteristic. Another 20% knows
that Monopolies are Price Makers. The remaining 10% know of the High Barriers to Entry.
0 10 20 30 40 50 60
High Barriers to entry
Firm is a Price Maker
No Competition
No Substitutes
Characteristicsof Monopoly that the
residents are familiarwith.
Characteristics of Monopoly
that the residents are familiar
with.
8. Figure 2
Figure 2, shows how Monopolies are formed: by ownership of Resources, by law, by
Mergers and by Competition. 30% of the residents think that Monopolies are formed by law
while 25% are formed by Mergers and another 25% are by Competition. The remaining 20% are
formed by Ownership of scarce resources.
Ownership of
scares resources
20%
By Law
30%
By Mergers
25%
By Competitions
25%
How are monopolies are formed.
9. Figure 3
Figure 3, shows the percentage of residents that are familiar with the concept of
Monopolies. 50% are familiar with the concept of Monopolies while 45% are not familiar with
the concept. 15% have an idea about what Monopolies do but aren’t sure what they are but are
not sure.
41%
45%
14%
Percentage of Residents that are familiar
with the concept of Monopolies.
Yes
No
Maybe
10. Interpretation
From the information collected from both the questionnaire and the interview the the
researcher can see that the residents are affected negatively by JPS’s monopoly.
11. Findings
The researcher, at the start of this research piece thought members of the public were ignorant to
the concept of Monopolies and that they were also unaware of the fact that the Jamaica Public
Service is a monopoly. Also the lives of the residents are impacted negatively by the JPS and
their pricing.
12. Recommendations
The researcher recommends that:
The Government puts more rigid measures in place to control Monopolies.
The General Public is made aware of the concept of Monopolies and other matters
related to this.
