Please choose one of the topics below. Then, write an essay consisting of 3 paragraph.

Elaborate your
own opinion with the references related to the topic that you choose.

1. PT PLN is one of the examples of company which monopolizes the market. What makes PT
PLN can monopolize the market?
2. A monopsony is a market condition in which there is only one buyer. Why monopsony is not
good for labour market?

Answer

1. PT PLN (Persero) is a BUMN that takes care of all aspects of electricity in Indonesia. In
electricity distribution services, PLN divides the functions of its main unit into several main units
based on the electric power system, namely generation, transmission and distribution. In addition,
there are also parent units or other centers to support the continuity of the company. Due to the
wide scope of PLN's work area, PLN has units throughout Indonesia which have their respective
functions according to their main unit.

PLN can monopolize the market because PLN is included in the type of pure monopoly. This is
shown because PT. PLN is a single seller or producer, a unique product and no close substitutes,
and the ability to apply any price they wish.

Market monopoly can occur because of very large capital. The company will also buy competitors
so that there are no more competitors left in the market.
Companies can monopolize the market if they have technology that is not owned by other
companies. This is an added value that can also get rid of all its competitors. In Indonesia alone,
several examples of monopoly companies are PLN, Pertamina and PDAM, in which the three
companies are used as the main suppliers of electricity, fuel and clean water for the needs of the
community.

2. A monopsony market is a market that consists of many sellers but is controlled by a single
buyer, either an individual or a business group. This causes an unhealthy price bargaining
condition because many sellers only depend on one buyer. The difference between a monopsony
market and a monopoly is in the control of the market, a monopsony market is controlled by a
single buyer while a monopoly market is controlled by a seller.

A monopsony market is not good for the labor market because it has the following drawbacks:
1) Unfair Buyer Conduct:
Often the buyer submits a price without considering the conditions being experienced by the
traders or the economic conditions experienced by the traders. Example: Buyers do not want to
increase their purchase price due to inflation, even though the production process carried out by
sellers is very expensive.
2) The Buyer Does Not Care About the Seller:
The power that is fully held by the buyer is often misused. With this power, they are not obliged
to listen to complaints experienced by traders, such as in terms of price, production process and
production time.
3) Economic Problems Are Only the Responsibility of the Seller:
Buyers rarely experience economic problems in this case, because they have the ability to be able
to make decisions that only benefit themselves.

Here is an example of a monopsony market:

1) Chocolate producers who produce cocoa beans as raw material, they buy cocoa pods from
various plantations.
2) Chicken sausage producers who buy their chicken meat raw materials from various chicken
breeders.
3) catfish breeders who cooperate with traders in markets and food stalls.
4) Dairy farmers who can only sell their cow's milk to one buyer because there is only one buyer
in their area.

Sources and references:

•https://ecc.co.id/company/site/view/188
•virtualofficeku.com
•https://accurate.id/ekonomi-keuangan/pasar-monopsoni/
•bhinneka.com