Captive market
Topic: Industrial Policy, Public Sector, MSMEs and Disinvestment · NCERT: Class 11, Ch 2 "Indian Economy 1950-1990"
Meaning
A captive market is one where buyers have little or no choice of supplier. Sellers do not face competition, so they have little reason to improve quality or cut prices. It matters because protection from competition can make producers lazy.
Example
Before 1991, import controls forced Indian consumers to buy whatever Indian producers made. NCERT asks why producers would improve quality "when they could sell low quality items at a high price?"
Don't confuse with
- Monopoly: this means one seller controls a market. A captive market can have several sellers, as long as buyers cannot turn to other sources such as imports.