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Microeconomics - Essay Example

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Though, monopoly is not a good thing in the market, it cannot be avoided from the market. Suppose, when the seller has a monopoly over certain resources which are used for producing a particular item such as oil, minerals etc. Sometimes, when a seller is equipped with a unique skill, which others in the same industry lack. In certain occasions, monopoly is legally attained for the patent or copy right for a product/service. Government also allows certain organisation to have sole power over certain product/service by legislation. One such organisation is what this paper is going to discuss about.
Indian Railway comes under the department of Indian Government, which came into being in1853. It is the world's second largest rail network. All the rail operations are managed by the state-owned Indian Railways, which fall under the jurisdiction of Ministry of Railways. Rail transport is one of the common modes of the transport for large population of the country. Its network spreads across 28 states and 3 union territories with limited services to places like Nepal, Bangladesh and Pakistan. (Indian Railways, para. 4) It is the second largest commercial employer in the world and has more than 1.54 million employees and runs as many as 11,000 trains daily. (Official web site of Indian Railway). It has been assisting the growth of Indian economy directly and indirectly since its inception. During the many ups and downs of the country's economy in the past, railway has been an integrating force to stabilize the economy and maintain economic growth of the country.
Nature of Monopoly of Indian Railway
Indian Railway is not a private corporate body. It operates under the Railway Department of Ministry of Railways of Government of India. But, in the recent times it is striving to attain the professionalism in management which is similar to that of giant corporate bodies. Since its inception, Indian Railway has been enjoying monopoly in the rail transport by virtue of the sole power granted by legislation. In most of the countries in the world, rail transport is owned and managed by Government. In fact, the reason for the non-existence of competition is that railway requires huge investment in the form of physical assets and human capital and the return there from is also uncertain. In such a situation, private players will not enter the market with fear of loss of huge amount.

Causes for non-existence of Competition (Reasons for Indian Railway's Monopoly)
1. Created and maintained by legislation
Indian Railway came into force by an Act of Parliament and it is being protected by the provisions of the Act. It has been serving Indian populace for over fifteen decades with right track record and public image. It is not enjoying the privileges of a private corporate body, but trying to introduce professionalism in operations and management.
2. Huge initial investment
Private players always have a second thinking about posing a threat to the publicly managed railway. One reason for such thinking is the huge investment requirement. Railway needs huge initial investment, which cannot be easily obtainable from the market.
3. Uncertain Return
Not only is the huge ...Show more


Monopoly is a market conditions where there is only one seller to meet the requirements of large number of buyers. In other words, monopoly exists where there is no competition. The buyers have no alternatives to select and purchase in a monopoly market. The single seller determines the price of his product, the supply at any point of time, and indeed, the quality of the product…
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Microeconomics Essay essay example
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