Answer to Question #209667 in Macroeconomics for Boitumelo

Question

Can Denel be regarded as a monopoly in South Africa

Answer 1

Denel can without a doubt be considered a public monopoly at the moment. According to conventional wisdom, privatizing a public monopoly does not eliminate the monopoly's power or the prospect of abusing it at the expense of consumers. In the absence of competition, the monopolist may be compelled to reduce production and hence raise prices.There is also concern about job losses, particularly in South Africa, which has a high unemployment rate, as well as concern about unregulated weaponry sales and exports, particularly to fundamentalists and governments with a terrible human rights record.