General economic theory: Competition. monopolized market. Abstract: Market monopolization, measurement and impact on efficiency Market monopolization leads to

modern man one can hardly be surprised by the presence of several hundred varieties of cheese and lemonade, a huge number of clothing and technology brands. On the contrary, he is often confused by the existence of only one manufacturer in the industry. Monopolization of markets is a situation where only one enterprise or person acts as a supplier of a particular service or service. IN this case the consumer has no choice, he is forced to agree to the established price. Monopolizing markets is also the process by which a company is able to raise prices and eliminate its competitors. And such enterprises are not necessarily large, it all depends on the size of the industry in which they operate.

concept

Economists identify four types of ideal market structures:

Perfect competition. In this situation, there are a huge number of substitute products, and entry into the market is practically unlimited. Everything is decided by the “invisible hand”.
Monopolistic competition. There are many manufacturers operating in the industry that produce substitute products. However, companies retain some control over pricing. This is determined by the levels of market monopolization.
Oligopoly. In this situation, there are several enterprises that produce similar products. They can develop a common strategy by setting prices in the industry.
Monopoly. This provides for the presence of only one supplier of products, which has full control over the industry.

Characteristics of a monopoly

The conventional wisdom says that perfect competition is practically a panacea, a compromise between the desires of the seller and the consumer. Majority economic models take this structure as a basis. But why, in this case, is the monopolization of markets? This is due to the fact that this state of affairs is extremely beneficial to the manufacturer. First, a monopoly allows you to maximize profits. Secondly, the manufacturer sets the price of his products through the determination of the volume of output. Thirdly, in a monopoly there are large barriers to entry into the industry. A single producer may not fear a rapid increase in competition.

Forms

When a market is monopolized, competition in the resulting structure is a fundamental feature for determining its type. There are three types of monopoly:

Natural. It arises due to objective reasons. This means that the demand for a given product is best satisfied by one firm. The reason may be the peculiarities of the production process or customer service. For example, such industries include energy supply, water supply, and rail transportation.
Administrative. This is created with the participation of the state. It, in the person of its bodies, grants a certain firm the exclusive right to carry out activities in the industry. The economy of the USSR was extremely monopolized. Most of the enterprises were under the control of departments and ministries.
Economic monopoly is the most common form. Its appearance is connected with the own initiative of enterprises. Both progressive development and rapid centralization of capital through takeovers and voluntary associations can lead to a monopoly position in the market.

Market monopolization conditions

The structures under consideration can either be created through a series of acquisitions by some companies of others, or be formed naturally in certain industries. The state can also create them. The monopolization of markets is a process centered on three main causes:

The production of goods by one firm is cheaper than by several. In this case, we can talk about
One enterprise is the owner of extremely rare resources or technologies. For example, the company Xerox at one time completely controlled the process of making copies. Knowledge of this process has been protected by patents. This is an economic monopoly.
Granting by the state to a certain enterprise the exclusive right to sell a certain good. In this case, there is a so-called administrative monopoly. In some states, only this form is permitted by law.

Sources of monopoly power

Under perfect competition, the price is equal to the average value of firms operating in this industry. Monopoly is higher. Therefore, this market structure seems to be undesirable for consumers. The main assistant of monopolies are barriers to entry into the industry. They prevent competition. Among them:

Economic barriers.
Legislative restrictions.
Intentional actions.

The first group includes the largest number of restrictive measures. This includes economies of scale. The size of the monopolies allows them to significantly reduce costs, ordinary firms simply cannot compete with them in the price of products. Therefore, their activities cannot be effective, since the cost of the goods they produce is much higher.

Another economic constraint These are investment requirements. If expensive equipment is needed to start production, this will also prevent the emergence of competitors. A monopoly may have a technological advantage or be the owner of the natural resources needed to produce goods.

Concerning legal restrictions, then this group includes intellectual property rights, including patents. They give the monopoly the exclusive right to produce a product or technology for its release.

The third group of restrictions includes a variety of deliberate actions taken by the monopoly in order to prevent the development of competition in the industry. For example, it can lobby its interests in the government through various corrupt practices.

natural monopoly

This form of the described market structure is often considered separately. This is due to the debate about its usefulness not only for the monopolist, but also for consumers. It occurs when there is a large value of the effect of economies of scale in production. A natural monopoly is a situation where a single firm provides the market with products at a lower cost than several firms would. A striking example is water and electricity supply. However, this does not mean that natural monopolies are completely harmless. Therefore, they need to be controlled by the state.

In international business

On world economy increasingly influenced by globalization and internationalization. These two processes are responsible for the fact that there is a monopolization of the market for services and services on international level. There are two types of such structures:

transnational monopolies. These include, for example, the food concern Nestle or the oil company Standard Oil of New Jersey. Both of these companies are national in terms of the capital that has been invested in them, and international in terms of their field of activity. Most of their production facilities are not located in the home country.
international monopolies. This type includes the Agfa-Gefert trust, which is engaged in the production of photochemical products. This type monopoly is international both in terms of its field of activity and in terms of the invested share capital.

Domestic realities

Monopolization Russian market has historical roots. In the USSR, the state almost completely controlled the economy. With the reduction of production in Russia, the demand for products of industries is gradually decreasing - natural monopolies except communication. This led to a rapid rise in prices in them. Given that these industries are fundamental, this provoked inflation. Some economists see the negative consequences of market monopolization as the main factor behind the crises in Russia.

Market monopolization

In this case, the firms that ensure the best use of limited resources do not necessarily become the owners of the market, and then these resources are distributed worse than they could be in a non-monopolized market.

Monopolization of the Market

Calculations showed that one company should not produce more than 40 percent of a particular type of product. Legislation prohibits any collusion to artificially maintain prices that do not correspond to the real relationship between supply and demand.

What is monopolization and how does it affect the economy?

(Sherman's Law). Later, similar laws appeared in other countries. Antimonopoly legislation is aimed at maintaining such a structure of production that would allow it to remain competitive. Calculations showed that one company should not produce more than 40 percent of a particular type of product. Legislation prohibits any collusion to artificially maintain prices that do not correspond to the real relationship between supply and demand.

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Market monopolization

Absolute monopoly and the economic consequences of market monopolization

Introduction…………………………………………………………………………….3

1. Main features of absolute or pure monopoly. The effectiveness of absolute monopoly…………………………………………………………….6

2.Positive and negative consequences market monopolization….17

2.1 Positive aspects of the monopolization of the economy……………….17

2.2. Negative factors of monopolization of the economy……………….20

3.Antimonopoly legislation and antimonopoly regulation: world experience and peculiarities in Russia……………………..23 Conclusion………………………………………………………………… ….…..thirty

List of used sources and literature…………………………32

INTRODUCTION

The relevance of research.

Problems of monopolization of economic life, competition for commodity markets today attract close attention not only of specialists, but also of the general population.

In competitive markets, many firms offer substantially homogeneous products, so that each firm has negligible influence on the price it takes for granted. On the contrary, the monopoly has direct competitors, therefore, it affects market price products. While a competitive firm is accepting the price monopoly sets the price products offered to the market.

Special consideration requires the so-called absolute or pure monopolies, the existence of which seriously affects the economy of a state or even an entire region.

In this paper, we will consider the consequences of establishing the power of the firm over the market. Power over the market leads to a change in the ratio of product prices and costs of the firm. A competitive firm takes the price of its output as given and then chooses the quantity supplied so that the price of the output equals its marginal cost. By contrast, the price charged by the monopoly exceeds its marginal cost.

The practice of setting a high price for products by a monopoly is hardly surprising. It may seem that buyers have no choice but to purchase the product at the price that a single supplier will set. Monopolies are not able to achieve any level of income they want, since a high price leads to a decrease in the quantity of goods purchased by buyers. Although the monopoly manages the price of goods, its profits are limited.

By studying the decisions of monopolies on the volume of output and setting prices, the consequences of the existence of monopolies for society as a whole will be considered. Monopoly firms, like competitive firms, pursue the goal of maximizing profits. But the movement towards the same goal entails very different consequences. Selfish buyers and sellers in competitive markets, regardless of their will, are guided by an "invisible hand" to ensure universal economic prosperity. But since the monopoly managed to avoid the control of competition, the result of the market activity in the case of a monopoly often does not correspond to the interests of the whole society.

The government sometimes has the opportunity to improve market performance. The analysis that will be carried out in this work will expand our knowledge of the “visible hand of the state”. In studying the problems that arise in connection with the activities of monopolies, we will discuss various ways with which politicians in power react to their appearance.

The purpose of the work is the establishment of signs of absolute monopoly and consideration economic consequences market monopolization

For this reason, the following work was tasks:

1. Consider the concept of monopoly and identify signs of absolute or pure monopoly

2. Identify positive and negative factors of market monopolization

3. Consider state regulation and antimonopoly policy in the world and on the example of Russia.

source the base was made up of documents on antimonopoly policy in the Russian Federation, diagrams and graphs showing the consequences of market monopolization

The degree of study of this topic, despite a large number of sources remains low.

The work used the works of both Russian and foreign authors, conducting a macroeconomic analysis of the monopolization of the market.

1. Main features of absolute or pure monopoly. Efficiency of absolute monopoly.

The market model of perfect competition comes from many premises that are not always implemented in practice. More adequate reality is the market model of imperfect competition.

The essence of the market mechanism of imperfect competition is most fully revealed by the criteria that determine the types of market structures. The most important of them are: the number of firms in the industry; the nature of the products; entry barriers to entry into the industry; degree of control or power over price.

The most serious obstacle that makes it difficult for new firms to enter the market, where the “old-timers” of the industry manage, are entry barriers:

1. The government grants the firm exclusive rights to certain types of activities through the issuance of diplomas, licenses, competitions, attestations.

2. Ownership of non-reproducible and rare resources. Thus, the institution of private property is used by the monopoly as a means of the most effective barrier to potential customers.

4. Scale effect, i.e. advantages of large-scale production, allowing to increase production volumes and reduce costs.

5. Illegal methods of dealing with new potential competitors (anti-advertising, dumping prices, pressure on raw material suppliers, poaching employees, threats from mafia structures, etc.).

The analysis of entry barriers helps to understand why the concentration of the market is so different in various fields economy, as well as the reasons for the deviation from the ideal market model of perfect competition, where many atomized firms operate.

Currently economic theory identifies three types of imperfect competition:

1. Pure or absolute monopoly (from the Greek "monos" - one, only, "polio" - I sell);

2. Oligopoly (from the Greek "oligos" - few, few);

3. Differentiation of products, due to which there is a lot of competition.

In the first variant (purely monopolistic competition), one producer (seller) or one buyer (in this case, the term “monopsony” is used) is established in any particular market, which gives rise to the absolute power of such a monopolist (monopsonist) over prices.

For example, if in a small town the only “serious” enterprise, say, is a butter and cheese plant, then it may turn out to be a monopolist in the local dairy products market and a monopsonist in the labor market as the largest buyer of labor.

Such a phenomenon of imperfect competition, which almost never occurs in practice, means a complete absence of competition and can be considered as another purely abstract model of the market.

Thus, in production and on the market, the main features of monopoly are: high concentration economic activity in the hands of one or more of the merged firms; dominant, i.e. the predominant position of these firms in the market for specific economic goods; setting monopoly prices (overpriced when selling and/or understated when buying goods) and thereby obtaining excess profits for themselves. The essence of the specific actions of the monopolist is that, by deliberately reducing the number of its sales and thereby creating an artificial shortage in the market, it seeks to increase the price. The monopsonist, on the contrary, reduces purchases from his suppliers (for example, grain, milk, potatoes from the farmer), creates artificial difficulties for them to sell products, thereby forcing them to lower prices.

Considering the circumstances in which one firm can become the only seller economic benefit in the market, in economic theory, the following types of monopoly are distinguished: closed, open, natural, organizational, simple.

A closed monopoly is protected from competition by legal restrictions (patents, state licenses, permissions of the copyright institution, etc.). Thus, in most countries, the state has the exclusive right to manufacture medicines, sell weapons, and so on.

Open or casual monopoly. In this case, the firm for some time becomes the sole supplier of some economic good, without any special protection from competition. Firms that first appeared on the market with new products often find themselves in this situation.

A natural monopoly is an industry in which long-run average costs reach a minimum only when one firm serves the entire market. In such an industry, the minimum efficient scale of production is close to (or even exceeds) the amount demanded by the market at any price sufficient to cover the cost of production.

Market monopolization

In such a case, the unbundling of the firm will lead to a loss of efficiency and economies of scale. Closely related to natural monopolies, which are based on economies of scale, are monopolies based on the ownership of unique natural resources.

A simple monopoly is a monopoly that sells its products at the same price to all buyers at any given time.

An organizational (man-made) monopoly is a large inter-industry associations created to maintain a certain price level or share the joint profits. Such associations are created intentionally by concentrating certain economic and managerial activities in someone's hands. At the same time, in order to obtain super profits and strengthen market power, strong companies either suppress their competitors (with the help of dumping or boycott); or carry out the so-called hostile takeover of rivals (buying their shares, sometimes anonymously); or voluntarily unite with each other (more often by mutual exchange of shares) in various unions, so as not to compete, but to jointly own the market in an orderly and profitable way; or create so-called affiliated companies, their branches. Historically, there have been three main forms of monopolistic unions: cartels, syndicates and trusts. The main differences between them are the breadth of agreements between the participants and the "density" of their association. Such a classification of the types of monopolies is very arbitrary. Some firms may belong to more than one type of monopoly at the same time. These include, for example, firms serving the system telephone connection, as well as electricity and gas companies, which can be classified as either a natural monopoly (because there are economies of scale) or closed (because there are barriers to competition). Classification of monopolies can be carried out taking into account time intervals. For example, a patent certificate makes a firm a closed monopoly in the short run, but such a monopoly may be open in the long run due to the limited duration of the patent and also because competitors can invent new economic benefits.

2.1. Positive aspects of the monopolization of the economy

The attitude of society and the state to various forms imperfect competition is always ambivalent due to the contradictory role of monopolies in the country's economy. On the one hand, monopolies can limit output and set higher prices due to their monopoly position in the market, which causes misallocation of resources and increases income inequality. Monopoly, of course, reduces the standard of living of the population due to higher prices. It is far from always that monopoly firms use their full potential to provide scientific and technical progress. The fact is that monopolies do not have sufficient incentives to increase efficiency through scientific and technical progress, since no competition.

On the other hand, there are very strong arguments in favor of monopolies. The products of monopolistic companies are of high quality, which allowed them to gain a dominant position in the market (except, however, "natural monopolies", which do not always rightfully gain access to a particular activity in the market). Monopolization affects the efficiency of production: only a large firm in a protected market has sufficient funds to successfully conduct research and development.

At the same time, one should not exaggerate the role of monopolies in providing scientific research and experimental design developments. Practice shows that many major discoveries in science and technology are carried out by relatively small, so-called venture companies. On this basis, large firms can emerge (an excellent example is Microsoft, which in 1981 had 100 employees in the United States, now has 16,400 employees in 49 countries, market value about $40 billion and an annual turnover of $5 billion).

In addition, large-scale production allows you to reduce costs and save resources in general. Thus, the increase in oil prices as a result of the actions of the OPEC countries had an extremely negative impact on costs in many sectors of American industry. Only the use of scientific research results by large companies made it possible to switch to fuel-saving technologies and reduce costs.

It should also not be forgotten that large monopoly associations (especially intersectoral ones, such as a metallurgical plant, the Stinol refrigerator plant that instantly became famous, and a consumer electronics assembly plant) in the event of an economic crisis hold out for the longest time and begin to emerge from the crisis before anyone else, the more thereby curbing the decline in production and unemployment.

Given the dual nature of monopolistic associations, the governments of all countries with a capitalist oriented economy try to some extent to resist monopolism, supporting and encouraging competition.

It may seem that monopoly and competition are completely incompatible with each other. After all, a monopoly can eliminate free competition, and competition undermines someone's dominance in the market.

Monopoly is in a complex contradictory relationship with competition. The very fact that the production and sale of a product is captured by a monopoly group of large entrepreneurs who receive great benefits from this causes intense rivalry - the desire of other businessmen to get the same gain. On the other hand, if an entrepreneur strives to defeat his rivals, then having achieved his goal, he begins to dominate the market. Conclusion: Monopoly breeds competition, and competition breeds monopoly.

IN modern conditions large capitalist associations have not destroyed competition, they exist together with it, this exacerbates the rivalry.

There is a significant number of enterprises that are not members of monopolistic associations and are waging a severe confrontation with them. In every country, monopolies are among the competitors foreign companies entering the domestic market.

Competition (lat. "concurro" - collide) - rivalry between participants market economy behind Better conditions production, purchase and sale of goods. Such a collision is inevitable and is generated objective conditions: the complete economic isolation of each producer, its complete dependence on market conditions, the confrontation with all other commodity owners in the struggle for consumer demand. The market struggle for survival and economic prosperity is economic law commodity economy.

The high prices at which the bulk of the products produced by the monopolies are sold in the monopoly industry make it possible for non-monopolized enterprises to often sell their products at such favorable prices. As a result, rivalry between monopolies and competition between the latter and non-monopolized enterprises lead to some reduction in industry prices.

In the United States, small and medium-sized firms produce about half of the gross national product(GNP), they create more than half of the jobs. Their products are purchased by large monopolies, who prefer not to take risks in the development of new products in science and technology. Thus, monopolies contribute to the development of small enterprises.

2.2. Negative factors of monopolization of the economy

Without the elimination of the monopoly in the sphere of production and circulation, there can be no talk of any market, since monopoly and the market are mutually exclusive things.

Under conditions of pure monopoly, all ongoing market measures are exaggerated, and sometimes they bring results that are absolutely opposite to those expected. So, in the recent past, price liberalization was reduced to a simple price increase, strengthening the position of monopolist enterprises, which, even with a reduction in production volumes, solve their problems at the expense of end consumers. In a monopolized economy, there is no correct competition, self-regulation, and, consequently, no market environment.

Monopolization slows down structural restructuring, since there is no motivation for work, accumulation, expansion, renewal, for the technical reconstruction of production, which ultimately leads to the physical and moral aging of funds and their “eating up”. Monopoly slows down scientific and technical progress, leads to stagnation in all areas of the life of society, to the complete defenselessness of the consumer.1

Losses from imperfect competition can be illustrated graphically (Fig. 2.1) and tabularly (Table 2.1).

Rice. 2. 1. Consequences of market monopolization

Table 2.11

The net loss to society as a result of the monopolization of the market is the loss to the consumer as a result of a reduction in output below the equilibrium.

According to some economists, the loss arising from the monopolistic misallocation of resources in the United States reaches 2% of the country's gross national product.

Thus, monopolies, by setting a price higher than the equilibrium one, set the volume of production below the efficient one, which leads to irretrievable losses of society. The activity of monopolies increases the uneven distribution of income, which can have negative socio-political consequences.

Since the activities of monopolies are anti-social in nature, the protection of free competition and the restriction of the activities of monopolies is one of the most important functions of the state.

3. Antimonopoly legislation and antimonopoly regulation: world experience and features in Russia

Antimonopoly regulation (regulation in the field of competition) is understood as the purposeful activity of state authorities to weaken market power, limit it, prevent its acquisition and abuse by economic entities, which is implemented through a system of appropriate economic, administrative and legislative measures. The basis of antimonopoly regulation is antimonopoly legislation - a set of laws and legal norms that establish the rights, duties and responsibilities economic entities arising in connection with their activities regarding the weakening of competition and the abuse of market power.

The main directions of antimonopoly regulation are determined antitrust policy, the directions of which include: limiting the monopolization of the market; control of mergers and acquisitions, price discrimination and other methods of unfair competition; protection of consumer rights; protection and support for small and medium-sized businesses.

Antitrust regulation first emerged in the United States in late XIX century with the adoption of a series of federal laws called antitrust. Currently, it is aimed primarily at preventing monopolization, that is, actions that are illegal in nature and actions whose legality is determined by the rule of reason. In the first case, the existence of the fact of illegal actions or agreements that undermine competition is sufficient for the firm's guilt to be proven. These include: horizontal price fixing; horizontal collusion about market share; agreed refusal to trade; agreement on mutual sales and purchases; related sales (in the assortment set by the supplier). In the second case, according to the rule of reason, all actions and agreements that can have an anticompetitive impact must be subjected to careful analysis, on the basis of which a decision is made.

Fundamentals of antitrust law in the United States

Sherman Act (1890). Prohibits contracts and associations in the form of a trust (or in any other form) that restrict trade, secret monopolization of trade or industry, sole control in a particular industry, price fixing.

Clayton Act (1914). Prohibits and prevents restrictive marketing practices, price discrimination (when this is not dictated by the specifics of current competition), horizontal mergers through partial or complete acquisition of the share capital of a competitor company, leading to restriction of competition, etc.

Federal Trade Commission Act (1914). It is aimed at preventing and suppressing unfair methods of competition and establishing control over the commercial ethics of companies. The Federal Trade Commission has the power to issue regulations and trade regulations, prohibition orders, monitor the activities of a company and, if necessary, investigate its actions.

Robinson-Patman Act (1936). Prohibits restrictive business practices in the field of pricing policy in trade: “price scissors”, price discrimination, etc.1

Wheeler-Lee Amendment to the Federal Trade Commission Act (1938). Expanded the rights of the Federal Trade Commission against companies that harm not only competitors, but also consumers and society as a whole, as well as false or misleading advertising and misrepresentation of product quality.

The Celler-Kefauver Amendment to the Clayton Act (1950). Clarifies the concept of an illegal merger, prohibits mergers through the purchase of assets, in contrast to the Clayton Act, limits horizontal mergers through the acquisition of non-equity capital of the company and vertical mergers leading to restriction of competition.

Hart-Scott-Rodino Act (1976). Strengthens requirements to prevent mergers aimed at creating monopolies or weakening competition, expanding the powers of agencies to enforce antitrust laws.

Tannay Act and Decree of Consent (1995). Adopted in connection with the activities of Microsoft and require that, before any agreement is entered into between the companies, a court determines whether the agreement is consistent public interest. Tighten control over relations between corporations and the Government, over corruption, lobbying by corporations of their interests to the detriment of the public. The court's role is to scrutinize not only the Government's expert opinion on antitrust violations, but also its impartiality.

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The market mechanism alone cannot prevent a particular firm from monopolizing the market for a particular product. At the same time, such a monopolization of the market may arise due to:

1) economic advantage;

2) various collusion or crowding out competitors.

There are no grounds for government intervention here. If such a firm tries to use its market dominance to drive up prices, then it will create conditions for other firms, even those with higher costs, to survive by offering lower prices.

The development of monopolies undermines the competitive beginning of a market economy, negatively affects the solution of macroeconomic problems, and leads to a decrease in the efficiency of social production.

It is in this situation that the state has to intervene in order to stop the monopolization of the market and restore normal competition, when market mechanisms can again work successfully.

Only the state with its possibilities of legislative and other anti-monopoly activities, the use of law enforcement agencies, if necessary, can limit monopolization.

The first experience of organized antitrust activity of the state was laid down by the adoption of antitrust legislation in the USA in 1890 (Sherman Law). Later, similar laws appeared in other countries. Antimonopoly legislation is aimed at maintaining such a structure of production that would allow it to remain competitive. Calculations showed that one company should not produce more than 40 percent of a particular type of product. Legislation prohibits any collusion to artificially maintain prices that do not correspond to the real relationship between supply and demand.

The market economy, with its mechanisms for regulating free competition and entrepreneurship, has largely contributed to the formation of the picture of the world that we have today. The advantages of this type of system are undeniable, but this was not always the case. Moreover, some sectors of the economy are still different countries have a monopoly basis. This is the only possible option their effective functioning. So what is a monopoly? What is its essence?

We reveal the concept

A monopoly is a market situation when a large enterprise or their association, engaged in the production and sale of unique products, dominates the industry. Such an economic entity is protected from competition. He is the only representative of the market producing a certain product.

Since the monopoly enterprise is in privileged conditions of existence and is the only source of supply, there is no need to fear for the size of demand. This gives him the opportunity to independently form prices and plan production processes according to qualitative and quantitative characteristics. Thus, monopolization is the capture of the entire market or its larger share by one large company.

In modern legislation, such activity is defined as the abuse by an economic entity of its position against the economy and existing laws.

Characteristic features of a monopolized market

Among them are the following:

There is only one seller.
The product or technology is unique and irreplaceable. Therefore, buyers have no choice.
There are insurmountable barriers to entry into the market of competitors.
The company dictates its price to the market.
Legal. When a monopoly is purposefully created by the state, it is under its total control. And in order to avoid the emergence of competition at the legislative level, a ban on the entry of similar enterprises into a particular industry is announced.
Natural. Barriers to entry of competitors are formed by themselves. Eg, public utilities regulated by the state, and for quite natural reasons, competition is not allowed here.
Economic. This type of barriers in the market is organized by the monopolist itself or they appear due to the political or economic situation in the country.

Types of barriers to entry into a monopolistic market

Reasons for the emergence of monopolies:

There are a number of sectors of the economy that are best managed cost-effectively by a single company or state. Such sectors include: energy supply, gas and water supply, pipeline transport, post office, rail transport, metro, etc. Economies of scale in the absence of competition make a monopoly in these industries financially justified.
Possession of a unique resource or technology. Monopolization is a temporary phenomenon until competitors catch up with the company that has taken the lead.
Reduced demand for the product. Low level demand also leads to the formation of a natural monopoly, since everyone understands the inappropriateness of creating competition due to small demand.
Consolidation of the largest companies in the industry. Firms may voluntarily merge to eliminate competitors. A forced merger or even takeover can also occur, when a more successful company buys a smaller or more profitable competitor.

Classification

Monopolization is a multifaceted complex phenomenon, therefore, there are many types of it, depending on what is taken as a basis. The most common classification criteria are as follows.

According to the form of ownership, the types of monopolies are:

state;
private.

According to the nature and cause of occurrence:

Natural. Due to the limited resources or characteristics of the production of goods, it is more economically profitable and more efficient to create a monopoly.

For example, the management of such natural resources as oil and gas is carried out exclusively by the state.

Artificial. This type of monopoly arises in the case of a merger of companies or in the absence of competitors.
Temporary, when a company is a temporary monopolist as long as it has a unique product or technology and has no competitors. This provision will last until other enterprises begin to produce a similar product.
Legal. allowed by the state. Protected from competition by the legal field.

By level state regulation:

indirectly controlled. They are created by business entities and are under the supervision of the state.
Directly adjustable. Monopolies are created and ordered at the will of the state in the public interest.

By territorial character: local, regional, national and transnational.

Types of monopolies - a whole section in economic theory. Due to versatility, there is also a division according to forms. Consider their varieties.

Forms of monopolies

The simplest is a cartel, since economic independence is reserved for each of the participants. The main meaning is reduced to the exchange of information and the conclusion of an agreement on prices and the division of sales markets.

A syndicate is an association of several companies from the same industry, as a result of which each of them retains control over its own production facilities, but commercial activity carried out by agreement of the parties. As a rule, a common sales department is created to simplify the functioning.

A trust is an association of several companies representing one or more sectors of the economy. There is a merger of production, marketing and financial management. In accordance with interest contribution each of the organizations in the common cause there is a distribution of shares, and subsequently profits.

Concern - association of companies from different industries on the basis of diversification. The legal independence of the participants is preserved, while a single financial center is being created. This increases the potential for production development.

A conglomerate is a merger or acquisition of companies from different industries to form a single financial control. Companies can be in completely unrelated industries. The main purpose of this is diversification.

Assessment of the degree of market monopolization

It depends on the predominance of one or another type of relationship in the economy. In order to assess the level of monopolization and competition, the following are distinguished:

Market of pure struggle. This is a situation where many companies operate with a variety of products on a mass production scale. Moreover, for the entry of new members economic relations there are practically no barriers.
Monopolistic competition market. There are many sellers in the industry with an interchangeable differentiated product, so there is a risk that if the price is not adequately overstated, the buyer may go to a cheaper competitor. This is the most common type of market structure today. This includes manufacturers of well-known brands of sportswear, cosmetic brands, etc.

Oligopoly. This type of market structure occurs when the number of companies producing similar and interchangeable goods does not exceed five. Barriers to entry are very high. Therefore, there is often, but not always, consistency among competitors. In this case, they can agree to share the sales market among themselves. Examples are companies involved in the production of aircraft, the automotive industry.
Monopoly. In this case, there is no competition, this is the exact opposite of the first type of market device.

Monopolization indicators

One of them is the number of manufacturers producing a particular product, and their division into groups depending on size and specialization. To assess the level of monopolization, one also looks at the volume of market share by manufacturers.

Other indicators:

Determination of what share of the total market volume falls on small, medium and large enterprises.
The Hirschman-Herfindel index as the main monopolization coefficient is expressed as the sum of the squares of the shares of companies as a percentage. The market is not captured when the indicator is below 1800. In this case, the possibility of mergers and acquisitions of companies is allowed. If this ratio is in the range between 1800 and 2500, then there is a certain risk that a large enterprise will capture too much market share, which will allow it to dictate its rules to the remaining competitors and buyers. In this case, the consent of the state is required for the merger of companies. If the index indicator is over 2500, then any enlargement of the enterprise through takeovers or mergers is prohibited.

Positive aspects: there are a number of sectors of the economy where competition is unacceptable. The presence of a monopoly in these areas contributes to the rational allocation of resources and economies due to the factor of mass production and cost reduction. Control over natural resources, high-tech and military developments, utilities, enterprises with a unique direction should absolutely not be given to private hands. The most effective will be the management of one company.

The main negative consequences of monopolization are related to the lack of competition. From this follows a long list of negative factors affecting the development of the country's economy.

Consequence of monopolization

Setting inflated prices.
Inefficient allocation of resources.
Lack of incentives to upgrade production facilities and introduce new technologies.
Decreased production efficiency.
Risk for an efficiently functioning sector of the economy.

Regulation of monopolies

The state tirelessly monitors the state of the market. It strikes a balance between competition and monopolization. Otherwise, excessive growth in the number of dominant companies can worsen the functioning of the entire industry. Like any other component of the economy, the activity of monopolies is under the control of a specialized authority.
Its main goals are:

Price regulation.
Creating and maintaining healthy competition.
Security economic freedom all business entities in the market.
Formation and maintenance of the unity of the economic space.

Thus, competition and monopolization are two radically different concepts, a counterbalance to each other. However, both have a dual characteristic, which implies that these market structures have both positive and negative sides. Competition is necessary for the progressive development of all sectors of the economy. However, as the practice of most states shows, monopolistic structures are also indispensable.

Monopolization is an economically justified phenomenon in certain market sectors. But without its regulation, a negative impact on the development of the industry is possible. That is why antimonopoly legislation was developed, which allows you to keep the situation under control and maintain a balance between these two types of economic relations.

Monopolies have a rather contradictory effect on the development of the economy. It can be both positive and negative.

Note first positive the impact of monopolies on the economy.

1. Since a large association of enterprises usually acts as a monopolist, therefore it has the opportunity to:

- apply Newest technologies, take advantage of mass production (have a positive effect on scale) and, on this basis, produce products at lower costs, which obviously leads to resource savings. By creating large-scale production, the monopolies were able to fill the markets with consumer goods and at the same time receive increased profits not only due to high prices, but low production costs;

- allocate more funds to finance research and development of new products and technologies, which contributes to the acceleration of scientific and technological progress;

- resist market fluctuations: during periods of crisis, large firms, and even more so their associations, are more stable, they are less at risk of ruin (and increasing unemployment) than small and medium-sized enterprises.

2. Monopolies, possessing huge capitals, contributed to emergence of new industries, which have become a kind of "locomotives" of national economies. This is the automotive industry, aircraft industry and others related to the category of capital and science-intensive industries, "unbearable" for small and medium-sized producers.

3. The relatively stable position of monopolies in the economy also ensures greater stability for the small and medium-sized companies associated with them, and, consequently, stable employment and incomes for their employees. Having subjugated a significant part of small and medium-sized enterprises, the monopolies at the same time contribute to their greater sustainability thanks to the fact that they became customers for many of them. Quite often, hundreds and even thousands of small and medium-sized enterprises work for one monopoly, supplying it with various parts.

4. At the enterprises of the monopolies themselves, as a rule, better working conditions and pay, than in non-monopolized enterprises, employment is more stable. All this has not only economic, but also social significance.

5. Significant contribution of monopolies to development of intra-company planning, management, marketing, which became important factors development of modern commodity economy. In addition, the monopolies began to develop a system of "human relations" at their enterprises, which is of great socio-economic importance, since it is aimed at fundamentally changing the relationship between enterprise managers and ordinary workers.

6. Products large companies often of high quality, which has allowed them to gain a dominant position in the market. Monopolization affects the efficiency of production: only a large firm in a protected market has sufficient funds to successfully carry out expensive research and development. It is well known that, although a significant part of the outstanding technical discoveries of the XX century. made by small entrepreneurs, their implementation has become the lot of "big business".

Thus, the existence of monopoly associations has a certain positive impact on the economy.

However, along with positive monopolies have on the economy and society as a whole negative impact.

1. Monopolies have the ability to:

- increase their profits by raising prices without reducing production costs;

- "exploit consumers", overestimating prices against their equilibrium level, reducing the range of products compared to markets where competitive firms operate;

2. Monopolies, being a product of the relations of competition, from the very beginning became crush competitors and, consequently, competition, nullifying the advantages of a commodity economy associated with it.

3. Practice monopolistic pricing was one of the reasons why average level prices in the markets has taken an upward trend. It is not uncommon for monopolies, by making cosmetic changes to their products, to pass them off as new or better ones and sell them at high prices.

4. Since the monopoly appears as the only producer and seller of some product, it seeks to influence demand, making it more predictable, but not in the interests of consumers.

Monopolies began to use methods of direct manipulation of consumer behavior, encouraging them to buy goods they do not always need, widely using advertising for this purpose.

5. Monopolies proved capable restrain scientific and technological progress, because they found it more profitable for themselves to increase profits by raising prices, rather than reducing costs. Moreover, in order to maintain their monopoly position in the markets for certain products, they can buy up patents, the use of which allows the production of substitute products that can compete with monopoly products. Patented inventions are often hidden from society and not used.

6. Since any monopoly seeks to expand its sphere of influence, the monopolies began to intrude into the sphere of state activity: legislation, administrative management, foreign policy in order to strengthen their economic positions with the help of the state. Moreover, the monopolies have shown a desire subdue the state to make it an instrument of his domination. Thus, with such a striving for monopolies, the state ceases to reflect the interests of the whole society, turning into a kind of "committee in charge" of the affairs of monopolies. This transformation weakens national economy and society as a whole.

Such actions of monopolies lead to a less efficient distribution of society's limited resources compared to perfect competition, generating losses for society as a whole.

Since the activities of monopolies lead to the restriction of competition and the violation of the objective laws of the market, it causes serious damage to consumers and society as a whole, i.e. is antisocial in nature, then the protection of free competition and the restriction of the activities of monopolies is one of the most important functions of the state.

To counter unjustified monopoly in developed countries the antimonopoly legislation and the corresponding system of bodies are in force.

Antimonopoly policy of the state is a set of economic and administrative measures (a set of laws) aimed at encouraging and protecting competition and limiting monopoly manifestations. It includes both measures that prevent the emergence of new monopolies and measures directed against existing monopolies.

The first question that arises when taking measures aimed at the demonopolization of markets is the question of the fact of monopolization.

The legislation of most countries assumes that the market is monopolized if:

1) one seller accounts for 33%;

2) for the share of three - 50%;

3) for the share of five - 66.6% of the market turnover (total sales in a particular market).

According to the Law of the Russian Federation “On Competition and Limitation of Monopolistic Activity in Commodity Markets” (1991), a market is considered monopolized if the share of one seller on it is more than 35%.

In general, a market is said to be competitive if it has at least 10 sellers.

The threshold market share as a characteristic of the market structure has the disadvantage that it is applied (especially in its domestic interpretation) to an individual firm and, in fact, does not characterize the structure of the market for a given product as a whole. Therefore, as the main characteristic of the market structure, the so-called Herfindahl-Hirschman index, and to determine the degree of monopoly influence of the firm is used Lerner index.

Market Concentration Index (Herfindahl-Hirschman index ) is used to determine the degree of market monopolization:

H \u003d p 1 2 + p 2 2 + ... + p p 2,

Where: H– concentration indicator;

r 1 , r 2 , ... r n is the percentage of firms in the market.

For example, if there are 10 firms on the market, each of which accounts for 10% of the market turnover, then HHI = 1000 (10 x 100); merging two firms into one and increasing its share to 20% immediately increases the HHI to 1200 (8 x 100 + 400).

Example. Let us estimate the degree of market monopolization in two cases: when the share of one firm is 80% of the total sales of this product, and the remaining 20% is distributed among the other three firms, and when each of the four firms carries out 25% of sales in the market.

The market concentration index will be:

in the first case, H \u003d 80 2 + 6.67 2 + 6.67 2 + 6.67 2 \u003d 6533;

in the second case, H \u003d 25 2 x 4 \u003d 2500.

In the first case, the degree of market monopolization is higher.

Based on the IXX, the state regulates competition in the markets. So, in the US, if:

1) XXX is less than 1000, then the market is considered non-concentrated, and any mergers and acquisitions are allowed;

2) XX is greater than 1000 but less than 1800, then the market is considered moderately concentrated, and mergers are allowed, but special rules are introduced to guarantee new enterprises the opportunity to enter an already developed market;

3) IXX is greater than 1800, then the industry is considered highly monopolized, and mergers and acquisitions are prohibited.

Lerner index. As a measure of the market ( Monopoly power is the amount by which the profit-maximizing price exceeds marginal cost. Under pure competition, price equals marginal cost and marginal revenue: P=MC=MR which allows you to maximize profits. For a monopoly, price exceeds marginal cost P>MC. This method of determining monopoly power was proposed in 1934 by the economist Abba Lerner and is called the Lerner measure of monopoly power:

L = (P - MC) / P,

Where: L– Lerner index of monopoly power;

R– monopoly price;

MS- marginal cost;

The numerical value of the Lerner coefficient is always between 0 and 1. Under perfect competition MS = R. Hence, L = 0. If L is a positive value ( L > 0), the firm has monopoly power.

The higher the Lerner index, the higher the firm's monopoly power.

By itself, the number of firms does not give an idea of how monopolized the market is.

The state in the fight against monopolies uses economic and administrative (legislative) measures.

Administrative measures aimed at the demonopolization of markets and the prevention of the accumulation of monopoly power by firms, are based on the relevant antimonopoly (antitrust) legislation.

All market economy countries have antimonopoly laws aimed at preventing monopoly manifestations in the markets, as well as unfair competition.

Legislative measures usually include:

3) forced demonopolization (fragmentation of monopoly firms);

4) nationalization of monopolistic companies in order to ensure the production of goods necessary for other companies and their sale at affordable prices.

Negative impact monopolies on the economy and society as a whole emerged already at the end of the 19th century. Reflecting the interests of society as a whole, the state in a number of countries began to take measures directed against monopolies. In 1890, for the first time in the world, the Sherman antitrust law was passed in the United States, which prohibited monopolistic collusion and association. He recognized as illegal and criminally punishable the monopolization of trade, the seizure of control over a particular industry, and collusion on prices. However, in legal relation the law was far from perfect and the monopolies retained the possibility of circumventing it. Therefore, in the United States in 1914, another antitrust law appeared, the Clayton law, directed against the creation of trusts and called "antitrust".

Since then, the United States has passed many laws to limit the power of monopolies, on the basis of which dozens of cases are heard in courts each year accusing certain companies of monopolizing markets.

For example, the lawsuit against AT & T (American Telegraph and Telephon), accused of monopolizing the market, was widely known. telephone services. Based judgment The company was split into 10 independent firms. The result of the creation of competition in the market of telephone services was a halving of prices for the corresponding services.

Another well-known example is the case against IBM (1969), which was accused of capturing 75% of the computer market and setting prices so low that they prevented competitors from entering the market. This process was won by IBM, which was able to prove that consumers benefit from low prices.

It should be noted that the antitrust laws of Western European countries are more liberal than those of the United States.

However, it was only after World War II that real antitrust laws began to take effect. This was due to both a more thorough legal study of the antimonopoly legislation, and the strengthening of the power of the state, which became capable of counteracting the power of monopolies.

In Russia, the “Law on Competition and Restriction of Monopolistic Activities in Commodity Markets” was first adopted at the end of 1991 and the Antimonopoly Ministry was established to carry out state policy to limit monopolistic activities.

The spearhead of antitrust law from the outset was directed not against large firms in general, but against firms that monopolized the market through restrictive practices. We are talking about the capture of resources (raw materials, energy, etc.); mergers and acquisitions of companies, an agreement between companies on the division of markets for products.

In all countries, except for the antimonopoly legislation, there are special systems of control over antimonopoly activities, special state bodies have been created. In the USA it is the Federal Trade Commission, in Germany it is the Federal Cartel Administration, etc. The Federal Antimonopoly Service (or simply FAS) has been created in Russia. TO the main tasks of the FAS relate:

- assistance in the formation of market relations based on the development of competition and entrepreneurship;

– prevention, restriction and suppression of monopolistic activity and unfair competition;

– state control to comply with antitrust laws.

Antimonopoly policy, directed against the monopolization of markets where competition is effective and necessary, is combined with the control and regulation of the activities of natural monopolies, which, under certain conditions, are preferable to competition.

In Russia, the regulation of the activities of natural monopolies is carried out on the basis of the adopted on July 19, 1995 federal law"On natural monopolies", which defines legal framework federal policy on natural monopolies in Russian Federation and is aimed at achieving a balance of interests of consumers and subjects of natural monopolies.

The purpose of state regulation of the activities of natural monopolies is to ensure, on the one hand, the availability of the goods sold by them to consumers, on the other hand, to create conditions for the effective functioning of subjects of natural monopolies.

For these purposes, the bodies regulating the activities of natural monopolies may carry out:

- price regulation through the establishment of prices (tariffs) or their maximum level;

- determination of consumers subject to mandatory service, based on the need to protect the rights and legitimate interests of citizens, ensure the security of the state, protect nature and cultural values.

Economic measures support of competition and the fight against monopoly is a set of tools with the help of which the possibilities of exercising the monopoly power of sellers are limited. Among the instruments of antimonopoly policy, direct and indirect ones are distinguished.

TO direct methods of regulation(restrictions) on the activities of monopolies include the establishment of:

1) "price ceiling" - the upper and lower levels of prices for products (no more than such and such, not less than such and such);

2) the marginal rate of price growth;

3) the marginal level of the rate of profit.

TO indirect methods antitrust policy can include all types state activity aimed at developing competition:

1) encouraging the creation of substitute products;

2) support for new firms, medium and small businesses (simplification of the procedure for creating new firms, tax incentives granting subsidies, loans);

3) provision of government orders to medium and small businesses;

4) opening of foreign trade borders (free international trade enhances competition in the domestic market);

5) attraction foreign investment, institution joint ventures, free trade zones;

6) financing of measures to expand the production of scarce goods in order to eliminate the dominant position of individual economic entities;

7) public funding R&D (research and development work).

General economic theory: Competition. monopolized market. Abstract: Market monopolization, measurement and impact on efficiency Market monopolization leads to

concept

Characteristics of a monopoly

Forms

Market monopolization conditions

Sources of monopoly power

natural monopoly

In international business

Domestic realities

Monopolization of the Market

What is monopolization and how does it affect the economy?

Market monopolization

Market monopolization

3. Antimonopoly legislation and antimonopoly regulation: world experience and features in Russia

Monopoly and competition in the Russian economy

Monopoly. Problems of antimonopoly regulation

Monopolies in economics

What is "Monopolization of the market? What does it lead to? What does it come from?

Monopoly. Definition of the monopoly price. Price diversification. monopoly power. Mon indicators

Monopoly power sources, indicators and economicconsequences

We reveal the concept

Characteristic features of a monopolized market

Types of barriers to entry into a monopolistic market

Classification

Forms of monopolies

Assessment of the degree of market monopolization

Monopolization indicators

Consequence of monopolization

Regulation of monopolies