Answer to Question #89682 in Microeconomics for lukhanyo

Question

Why Eskom is monopoly

Answer 1

A monopoly is a firm that is able to independently determine the prices of its products or services without considering market forces. This market structure exists when there is a sole producer or seller of a product or services in a market. Eskom is a monopoly since it is the sole producer and distributor of electricity in South Africa hence can independently determine the price of electricity in the market. Eskom’s monopoly is further enforced with the presence of an electricity distribution network that reaches a significant population in South Africa. From this consideration, Eskom is the sole distributor of electricity, therefore, a monopoly.