The concept of market structures and their classification. The essence and main features of the market structure. Classification of markets from the point of view of buyers

The classification of market structures is presented in Table 7.1. There are two types of markets:

perfect competition;

imperfect competition.

Competition in which at least one of the characteristics of perfect competition is not observed is called imperfect. An extreme case is pure monopoly when an industry is dominated by only one firm, the boundaries of the firm and the industry coincide.

When there are a limited number of firms in an industry, a situation arises oligopolies. The opposite situation occurs when there are many firms, but each of them has at least a small part of monopoly power. This situation is called monopolistic competition.

The presence of one buyer in the market is called monopsony. A company that manages to sell goods to different categories of consumers at different prices is called a firm that engages in price discrimination.

When a monopsonistic buyer and a monopolist seller collide, we have bilateral monopoly. If there are only 2 firms operating in an industry, then this special case of oligopoly is called duopoly.

Table 7.1

Classification of market forms

Monopsony is a type of market in which there is only one buyer of a product, service or resource. More generally, a situation in which a company is a monopolist in a market where it acts as a buyer. In this case, firms set their own prices. For example, in the market work force This situation may arise when one employer dominates a market for a particular specialty or a market that is particularly located. This may occur when workers are guided in choosing employers not only by motives related to wages, but also, for example, the proximity of work from home. The term "monopsony" comes from ancient Greek and means "one buyer."

Pure monopsony is a rare phenomenon, as is pure monopoly. It can exist in small towns, in which, for example, a single firm employs all able-bodied residents. Or the government as the only buyer, in particular, of nuclear weapons. It purchases all its market offerings, since the sale of this product to other buyers is prohibited.

Oligopsony - this is the structure of the market for production resources, when a small number of firms purchase the entire market supply of a certain production resource. Oligopsony refers to a type of market in which there are only a few buyers, who are opposed by a large number of sellers (producers). Oligopsony is the opposite of monopoly. An example of oligopsony is professional sports leagues. Athletes can sell their services to a small number of companies. Oligopsony is similar to oligopoly in that competing firms perceive their interdependence. In oligopsony, several firms have monopsony power and can influence the price of a resource.

Monopsony power is the ability of a single buyer to influence the prices of the resources it purchases. When firms with monopsony power increase their purchases, the price they must pay increases. The supply of production resources to a monopsonist firm is characterized by an ascending curve.

A firm with monopsony power in the input market maximizes profits by purchasing the input up to the point where the marginal cost of the input equals the revenue from marginal product of a given production resource: MC = MRP.

In modern economic literature there are many market classifications developed by various authors. However, there are several general criteria by which the main components of a single market system can be identified:

The nature of competition;

Objects of purchase and sale;

Market subjects;

Nature of sales;

Level of saturation with commodity mass;

Degree of demand satisfaction;

Compliance with legislation;

The nature of the product range;

Transport-geographical factor;

Industry characteristic;

Taking into account differences in customer needs, etc.

Let's take a closer look at these classifications.

1. The most common classification feature, which is identified by almost all economists when considering types of markets, is the nature of competition:

Perfect competition (pure);

Imperfect competition.

Table 1 shows the main characteristics of these market types.

Table 1. Classification of markets by nature of competition

A pure competition market consists of a large number of independently operating sellers and buyers of any homogeneous product in a highly organized market (at the equilibrium price of general supply and demand).

A pure monopoly market consists of one seller with a product that has no analogue or substitute, which allows the manufacturer to dictate terms to consumers. A monopoly on the demand side is called monopsony. If one seller is opposed by one buyer, the market structure is called a bilateral monopoly.

A monopolistic competition market consists of many buyers and sellers who transact not at a single market price, but over a wide range of prices. The presence of the latter is explained by the ability of sellers to offer different options for goods that differ from each other in quality, properties, and external design.

An oligopolistic market is characterized by a small number of sellers, the general interdependence of producers, and the ability of an individual enterprise to predict the responses of competitors to changes in price or production volume. The small number of sellers is due to the fact that it is difficult for new entrants to penetrate this market. Sergeev S.N., Rotova N.A., Kondrikova A.R. Pricing in various types of markets // Complex problems of development of science, education and economics of the region: Scientific and practical journal of the Kolomna Institute (branch) of Moscow State Medical University (MAMI). - 2012. - No. 1. - P. 48-50.

2. From the point of view of the object of purchase and sale, some economists distinguish two types of market: the market for resources and the market for consumer goods. See Ofilenko Consumer Goods Market. M., 2011., Vechkanov G.S. Microeconomics: Textbook for universities. - M., 2012, etc.

Other economists believe that the nature of the object of purchase and sale is more complex, and therefore the selection of only two types of market according to this criterion does not correspond to the diversity of real life. In this regard, according to the nature of the object of purchase and sale, it is customary to distinguish:

Consumer market, or the market for goods and services purchased by the population;

Factors of production market. Davydenko L.N. Economic theory. - M., 2012.

In economic science, four groups of production factors are distinguished: human resources, natural resources, capital, entrepreneurship - each of which takes its place in the economic system and performs certain functions. At the same time, under by human resourses or labor mean any intellectual or physical activity of a person aimed at achieving any useful result. Entrepreneurship is a special factor through which the above three factors of production are combined. Nizova L.M., Smirnova E.G. Factors of production markets: theory and practice // Journal of Economic Theory. - 2011. - No. 3. - P. 180-188.

Another feature of the demand for factors of production is that their consumption is interrelated. They are not used separately and cannot function in isolation from each other. During the production process, factors continuously interact with each other and sometimes replace each other. Agafonova M.S., Alifanova Yu.N. Problems of the production factor market and its features. - 2013. - No. 10. - P.132.

3. According to the nature of sales, the market is divided into: wholesale and retail.

The wholesale market, or enterprise market, is a market of individuals or organizations purchasing goods or services for their further use in the process of production, resale or redistribution.

According to this definition, we can say that wholesale market presented by:

Enterprises purchasing goods for their subsequent processing;

Intermediary organizations that purchase goods for resale for profit;

Government agencies carrying out procurement to ensure the performance of their functions.

Retail market is a property complex intended for the implementation of activities for the sale of goods (performance of work, provision of services) on the basis of freely determined prices directly at the conclusion of retail purchase and sale agreements and household contracting agreements and which includes retail outlets.

4. According to the level of saturation with the mass of goods and the degree of satisfaction of demand: the market is equilibrium, deficit and surplus.

5. From the point of view of compliance of the functioning of the market with the current legislation, there are distinguished: legal and illegal (shadow, black) markets.

6. By the nature of the product range:

A closed market in which only the first manufacturer’s goods are presented;

A saturated market with many similar products from many manufacturers;

A wide-range market in which there are a number of types of goods that are interconnected and aimed at satisfying one or more related needs;

A mixed market in which there are a variety of products that are not related to each other.

6. By the nature of the transport-geographical factor: local, regional, national and world markets.

7. By industry: automobile market; oil market; market computer equipment etc.

The process of increasing complexity of the market structure continues. It is enough to point out that in the age of electronics, telephone, telex and computer markets are emerging. Let's also consider the classification of the market proposed by O.N. Beketova. (Table 2) Bektova O.N. Business planning. Electronic resource http://www.be5.biz/ekonomika/p005/toc.htm.

Table 2. Market classification

Classifying feature
According to the economic purpose of market objects	1. financial market; 2. labor market; 3. innovation market.
In the sphere of social production	1. market for goods of material production (raw materials, food, machinery, equipment); 2. market for spiritual goods (achievements of science, technology, works of art, books).
By nature of end use	1. market for industrial goods; 2. market for consumer goods.
By period of use:	1. durable goods market; 2. market for non-durable goods; 3. market for disposable goods.
By territorial coverage	1. world; 2. internal; 3. regional
According to the ratio of sellers and buyers	1. perfectly competitive market 2. imperfectly competitive market
By sales volume:	1. the main market where the bulk of goods are sold; 2. additional (auxiliary) market, into which the company enters with a small part of the product; 3. selective market, which is selected to determine opportunities for selling new products and conducting trial sales

Authors Ermakova Zh.A., Korabeinikov I.N. depending on the purpose economic analysis The following types of markets are distinguished: by the objects of trade transactions, by the level of standardization of the product (service), by the type of buyer, by the presence and size of barriers to entry, by the degree of regulation of the market process by the market participants themselves, by the scale of the participants’ operations. Ermakova Zh.A., Korabeinikov I.N. Development of the information services market // Bulletin of OSU No. 4. - 2012. - No. 4. - P. 131 -137.

V.Ya. Pozdnyakov and S.V. Kazakov provides a classification of markets by industry, while the indicated authors give following definition industry - a distinguished and generalized structure of enterprises, corporations, organizations on the basis of the unity of the economic purpose of the products, works, services produced, Pozdnyakov V.Ya., Kazakov S.V. Economics of the industry: textbook. allowance. M.: INFRA-M. - 2010. - 309 p.. By type, Russian industries are divided into the following groups: primary industries - mining industry and Agriculture; secondary industries - manufacturing industries; infrastructure sectors - housing construction, transport, trade, healthcare, services to production and the population; branches of management and science, scientific services.

However, in these classifications, science is presented as a service sector for material production, which at the present time in the development of economic relations cannot be considered the correct position. The market space consists of interconnected, but with a certain independence, specialized markets. A specialized market is a meeting place between the seller and buyer of goods and/or services of a certain industry (type of activity) or a combination of them. Each market, due to the industry of the product, has certain specifics and its own mechanism for setting prices, its own barriers to entry and exit of firms (industries) and its own limits on the number of goods (services).

Having examined the main classifications of markets, we can conclude that the following types are particularly distinguished in the market structure:

Markets for goods and services, which include markets for consumer goods, services, housing and non-industrial buildings;

Factors of production, which include markets for real estate, tools, raw materials, energy resources, minerals;

Financial markets, i.e. capital markets (investment markets), credit, valuable papers, currency and money markets;

Markets for intellectual products, where the objects of purchase and sale are innovations, inventions, information services, works of literature and art;

Labor markets, which are economic form movement (migration) of labor resources (labor).

In actual practice, the main types of markets are divided into various submarkets, or market segments. Market segmentation is the division of consumers of this product into separate groups that have different requirements for the product. Market segmentation can be done in different ways using different factors.

Firstly, taking into account geographical factors, consumer groups can be distinguished by region, administrative division, population density, and climatic conditions.

Secondly, based on demographic factors, we can group consumers by age, gender, family size, income level, professional composition, level of education, religious affiliation, and national composition.

Third, taking into account behavior various groups consumers, the following market segments can be distinguished: a) the purchase of goods is random; b) seeking benefits when purchasing goods; c) status regular customer; d) emotional (positive, negative, indifferent) attitude towards the product.

Fourthly, consumers can also be divided into groups according to social composition (with varying degrees of income), lifestyle (elite, youth, sports, etc.), personal qualities (ambitious, authoritarian, impulsive).

Having considered various classifications markets, we can conclude that the types and types of markets are not isolated, but are inextricably linked and exist as a single market system, all elements of which are in certain relationships with each other. The role of these relationships and proportions is extremely great.

The market is a complex multifunctional integrated concept, including, on the one hand, the market for goods and services, and on the other, the market for resources, in the interconnection and interaction of which the modern economic mechanism is identified.

The market is a general form of interconnection between subjects economic activity, through which the flow of goods, labor and capital is realized at various points in the economic space. From a functional point of view, the market can be defined as a set of economic relations covering the stages of production, distribution, exchange and consumption of goods and services, operating on the basis of the laws of value, supply and demand.

The basic principles of market functioning are:

Freedom of economic and economic activity;

Diversity of forms of ownership;

Primacy of the consumer (the consumer dictates his will, desires, taste to the manufacturer);

Market pricing; the price on the market is formed as a result of bargaining between the seller and the buyer, the relationship between supply and demand;

Competition;

Openness of the economy ( business organizations and entrepreneurs have the right to carry out foreign economic activities).

The economic essence of the market is manifested in its functions: regulatory, foam-forming, stimulating, distribution, information, intermediary, sanitizing.

market equilibrium information functioning

	Introduction …………………………………………………………….
	Market structure: essence, main features………………..
	1.1 General characteristics of market structures………………….
	1.2 Classification of market structures………………………….
	Perfect competition………………………………………………………...
	2.1 The concept of perfect competition………………………….
	2.2 The meaning of a perfectly competitive market………………….
	Imperfect competition…………………………………………...
	3.1 The concept of imperfect competition………………………..
	3.2 Pure monopoly………………………………………………………………
	3.3 Oligopoly……………………………………………………..
	3.4 Monopolistic competition…………………………….
	Conclusion ………………………………………………………..
	Literature ………………………………………………………..

INTRODUCTION

this work is devoted to the structure of the market and its main types. The relevance of this topic is that we will study the market structure in detail. Its position, factors of production, markets for products and services.

Modern economics is of a market nature. The market system turned out to be the most effective and flexible for solving the main economic problems. It has been formed for more than one century, has acquired civilized forms, and, apparently, will determine the economic appearance of the future in all countries of the world.

Purpose of the work: to consider market structures and types of competition.

This goal considers such tasks as:

1. Market structure: essence, main features;

2. Perfect competition;

3. Imperfect competition.

The subject of this course work is market structure, and the object is the peculiarities of market structure.

When writing this course work, the literature of such authors as Braginsky S.V., Vysokovsky A., Simpson T. and others was used.

The course work consists of three main sections.

The first chapter examines market structure.

Chapter 2 talks about perfect competition.

The third chapter examines imperfect competition and what it consists of.

1. MARKET STRUCTURE KEY FEATURES

1.1 General characteristics of market structures

Market structure is a complex concept with many aspects. It can be determined by the nature of the objects of market transactions. There are markets for production factors (land, labor, capital), markets for products and services, markets for durable (more than a year) and non-durable (up to a year) goods, etc.

The classification of market structure is based on determining the number of sellers and the nature of the product.

Market structure indicates the number of buyers and sellers, their shares in the total quantity of goods purchased or sold, the degree of standardization of the goods, as well as the ease of entry into and exit from the market. Pure monopoly and perfect competition are two extreme forms of market structure. In a purely monopoly market structure, only one firm realizes the entire market supply of a particular product, and the emergence of other firms is impossible. Real market structures fall between these two extremes. Limiting cases, however, provide material for understanding many problems, which is useful for understanding intermediate options. Analysis of data related to market structure is used to determine the likelihood of whether firms in a market can influence the prices of the goods they sell.

The single concept of “market” often implies a combination of many types and types of markets, differing from each other in various ways. Despite the lack of a generally accepted classification of markets, they can be divided into groups according to certain characteristics: organizational, functional, spatial. Based on these characteristics, markets are divided into the following groups: organizational feature, that is, according to the degree of restriction of competition, there are four main models:

1) a perfectly competitive market;

2) market of monopolistic competition;

3) oligopolistic market;

4) purely monopolistic market.

Economists distinguish several main market models according to the degree of restriction of competition, that is, according to the degree of monopolization. Market competitiveness is a very important factor influencing the behavior of producers and consumers. Competitiveness is determined by the extent to which its participants can influence the prices of goods sold. The less such influence, the more competitive the market is considered to be. a brief description of These models can be reflected by the following points: in conditions of pure competition (perfect competition), there is a very large number of small firms producing a standardized (identical) product, and there are no barriers to entry into the industry, that is, the release of a product by any willing firm. In contrast, a pure monopoly involves a single firm as the seller, an undifferentiated product, and a variety of barriers to entry into the industry. Monopolistic competition is characterized by a relatively large number large firms producing a differentiated product (say, clothing, shoes), and relatively free entry into the industry. An oligopoly is characterized by a small number of large sellers who have the ability to influence the price of goods, the volume of supply, and the difficulty of entering the industry.

Before looking at these types of markets in more detail, it should be noted that this classification is based on the behavior and number of sellers. But, as you know, there are two subjects in the market - sellers and buyers. So, from the point of view of the behavior of buyers in the market and their number, they distinguish monopsony (monopoly of one buyer), when the market is dominated by one buyer and many sellers (the situation is quite extraordinary and occurs extremely rarely); oligopsony - the presence of several large buyers who have the ability to dictate terms to the market, and a competitive market in which many buyers are represented.

Most often, the market, depending on its competitiveness, is divided into two types - the market of free competition (perfect competition) and the market of imperfect competition, divided into monopolistic market, oligopolistic and monopolistic competition market.

To explain the classification of market structures from the point of view of the relationship between competition and monopoly, consider the diagram shown in Table 1. It presents theoretically possible and typical options for market organization depending on the number and strength of the carriers (subjects) of supply and demand, that is, producers and consumers.

Table 1

Classification scheme for market structures.

2. PERFECT COMPETITION

2.1 The concept of perfect competition

The main features defining this market are the following:

1) many firms classified as small and producing homogeneous (homogeneous) goods;

2) complete absence of barriers to entry into the market;

3) the absence of restrictions on intersectoral capital flows;

4) complete information, that is, perfect knowledge of the market by consumers and producers;

5) lack of control over prices on the part of producers and consumers.

Strictly speaking, taking mercantilism for the initial chronological period, we have to deviate from tradition, because Western historians of economic doctrines deny their contribution to economic theory, and the physiocrats, for whom this role was established, considered competition as a natural form of market relations.

Imperfect competition, as a scientific concept, is associated with the name of A. Smith. The market regulation mechanism, which he called the “invisible hand,” shapes the prices of goods under the influence of demand, supply and competition. Note that his main work, “An Inquiry into the Nature and Causes of the Wealth of Nations,” which brought A. Smith world fame, was directed, first of all, against the policy of mercantilism, customs restrictions and fiscal policy of the state, which, according to his concepts, should generally refuse to interfere into economic life.

From the very beginning, competition was assigned not only a function of market regulation, but also a stimulating role. In other words, it was considered as a factor in the development, improvement of production and the quality of the produced commodity mass. Although the physiocrats, based on their theory of the natural order, did not consider merchants and industrialists as a productive class, A. Smith overcame this limitation, which allowed the classics to expand the “functional capabilities” of competition, giving it a role productive force and the factor of social development or progress, understood since then as the growth of social welfare.

So, in competitive environment there are processes directed against this competition itself or, at least, limiting it. Instability is manifested in the fact that in a market environment, each individual manufacturer strives to capture and secure a large market share for a given type of product. This leads not only to increased profits, but also provides conditions for survival in a competitive environment. Hence, the elimination of competitors is considered a normal phenomenon, consistent with the principles of survival of the fittest, if, of course, such elimination is carried out within the framework of the law. And the law, as you know, does not prohibit various types of mergers and acquisitions, that is, concentration of production. Moreover, both economic theory and operating practice large enterprises, speaks out for increasing the scale of production.

As for market states, they had to solve more complex problems, both at the state, that is, practical level, and in the field of economic theory. To date, these theoretical provisions can be considered complete. The theory of a competitive market includes a classification of markets according to types of competition and an analysis of the functioning mechanisms inherent in each of these types. Since for the purposes of course research the analysis of mechanisms does not seem to be the main thing, and literary sources on it are quite widespread, we will focus on classification.

Perfect competition exists in areas of activity where there are quite a lot of small sellers and buyers of identical (same) goods, and therefore none of them is able to influence price of the goods,

Here the price is determined by the free play of supply and demand in accordance with the market laws of their functioning. This type is called a “free competition market”.

Existence huge amount buyers and sellers means that none of them has more information about the market than the rest of the sellers, having come to the market, they find an already established price level, which is beyond their power to change - after all, the market itself dictates the price at every moment of time. This situation allows new sellers to start producing products on equal terms (price, technology, legal conditions) with existing sellers. On the other hand, sellers can calmly leave the market, which implies the possibility of an unhindered exit from the market. Freedom of “market” movement creates conditions for the number of producers to always change in the market. At the same time, the remaining sellers still lack the ability to control the market. Because they represent small production and there are a lot of them.

2.2 The meaning of a perfectly competitive market

For all its abstractness, the concept of perfect competition plays an extremely important role in economic science. It has a methodological role.

First, the model of a perfectly competitive market makes it possible to judge the operating principles of many small firms selling standardized, homogeneous products, and, consequently, the operating conditions that are close to perfect competition.

Secondly, it has enormous methodological significance, since it allows – albeit valuable large simplifications of the actual market picture – to understand the logic of the firm’s actions. This technique is typical for many sciences.

The methodological value of the concept of perfect competition will be fully revealed later when considering the markets of monopolistic competition, oligopoly and monopoly, which are widespread in the real economy. Now it is advisable to dwell on the practical significance of the theory of perfect competition.

3. IMPERFECT COMPETITION

3.1 Concept of imperfect competition

Markets in which either buyers or sellers take into account their ability to influence the market price are imperfectly competitive.

Many markets, such as automobiles, breakfast cereals, and restaurant specialties, are imperfectly competitive.

A firm is “imperfect” as long as its demand curve slopes downwards and resembles the demand curves of entire industries rather than the horizontal demand curve of each small perfect competitor in a perfectly competitive industry.

In a perfectly competitive market there are many buyers and sellers, none of whom are large enough to influence the market price. As a result, buyers and sellers in a competitive market view the price as fixed and beyond their control. To maximize their profits, sellers choose the level of output at which marginal cost equals price.

However, in imperfectly competitive markets, individual sellers can influence the price they receive for their products. When figuring out how to maximize profits, they naturally take this ability into account. Characteristic features of three enlarged types of imperfect competitive markets: monopolistic competition, oligopoly and monopoly, which are most important in practice. In all three types of markets, as in perfectly competitive markets, there are many sellers, each of whom is too small to have any significant influence on the market price by his own actions.

How imperfect can imperfect competition be? The extreme case is the presence of a single seller who has the practical power of a complete monopolist. He is the only manufacturer in his industry. And there is no other industry that produces any close substitute for its products.

The market of imperfect competition is a truly real market, the structure of which has developed at the moment as a result of technical progress and those large-scale effects discussed above. However, imperfect competition takes many forms. In the most general case there are four of them:

a) monopoly (pure). Production is concentrated in only one company or corporation, which produces this type of product. Naturally, the manufacturer has a very high degree of control over product prices;

b) duopoly. The production of a given and homogeneous type of product is concentrated in two companies. Each manufacturer is limited in its ability to control prices (partial control over them);

c) oligopoly. This is a relatively small number of firms, and the ability to control prices is limited to to a greater extent than with duopoly; firms (corporations) produce homogeneous products (slight differentiation is possible);

d) monopolistic competition. Characterized by a multitude of manufacturers producing differentiated products, but homogeneous in functionality, and such differentiation can be either imaginary or real; price controls are very weak.

From the above it is clear that there are two poles of market structures. The first of these is a perfectly competitive market. The second is a pure monopoly. Both of these poles should be considered as very conditional, in the sense that real markets are located either closer to one pole or closer to the other. In fact, it is very difficult to recognize the existence of a pure monopoly, for at least two reasons: firstly, for monopoly products it is always, or almost always, possible to find a substitute or a substitute product, and secondly, in conditions of open international trade, instead of a national product, you can purchase a similar or similar foreign product. On the other hand, it is difficult to imagine a market structure corresponding to pure competition. It is believed that agricultural products, or rather the market for agricultural products, meets the requirements of perfect competition. In many ways this is true. However, with limited land plots, it is not easy to meet the requirements of free entry into the market. In addition, agricultural producers themselves usually do not directly enter the market, that is, into the sphere of circulation, but work either under contracts or on exchange orders.

In this regard, it is worth highlighting the situation of the so-called natural monopolies. Strictly speaking, this is indeed a pure monopoly, but this is not due to artificial barriers to entry into the industry, but to reasons related to efficiency, when the activities of one company are clearly more effective than the presence of many competing organizations. In other words, we're talking about about economies of scale. There are many examples of natural monopoly: local provision of electricity, gas, telephone services.

When characterizing market structures, such an important category as entry barriers was noted. This problem was first considered in the works of the modern American economist J. Bain. It is clear that an “entry barrier” is a condition that makes it difficult for new firms to enter an industry where established enterprises already exist.

Experts in competition theory note, in general, the limited possibilities for producers to set prices for their products. This is important because even for imperfect competition the market environment is quite efficient. But it should be remembered that competitive fight represents a process that goes back to the distant past, a process that is poorly or well regulated in traditional market states, and the presence of barriers makes it possible to maintain production capacity at the level at which the satisfaction of effective demand for both consumer goods and industrial consumption goods is ensured. The current situation in our country is fundamentally different from traditional market countries.

3.2 Pure monopoly

A pure monopoly is a situation where there is a single seller of a product that has no close substitutes. This term also means this sole seller of the goods. A market dominated by a monopoly stands in sharp contrast to a fully competitive market in which many competing sellers offer a standardized product for sale. Buyers who want to consume a monopoly firm's product have only one source of supply. A pure monopoly has no rival sellers competing with it in its market.

The concept of pure monopoly is an abstraction. There are very few (if any) foods that don't have substitutes. The local electric company may be the only seller of electricity in the area, but electricity has substitutes for many of its uses. When the price of electricity increases, the quantity demanded for heating purposes decreases. Natural gas and oil-fired stoves are good substitutes for electric heating. In the same way postal service The USA is only at first glance sole supplier letter delivery services. Its services can be replaced by express delivery services, telecommunications, including electronic transmission of written messages.

It is rare that there is only one seller in a national or global market. De Beers Consolidated Mines, Ltd., of South Africa accounts for about 85% of annual diamond sales. Although the company cannot be considered a pure monopoly, it is very close to it. When De Beers offers more diamonds for sale in a month, then, other things being equal, the price of diamonds will fall. Although De Beers is not a pure monopoly, it sells a very large share of all rough diamonds purchased annually and can influence diamond prices by controlling the quantity it offers for sale.

It's quite unusual, but pure monopoly is more common in local markets than in national markets. For example, if you attend college in small town, there may only be one college textbook seller there. The bookstore would have a local monopoly on the sale of various textbooks. Likewise, small towns may have a single general practitioner or a single dentist, who then have a monopoly on medical and dental services in the area. You encounter local service monopolies every day because most communities have one telephone company that provides local service. Similarly, local monopolies provide such public utilities, like electricity, gas, transport. However, many of these public utilities are regulated by government agencies in an attempt to keep these businesses from using their monopoly power to influence prices.

A firm has monopoly power when it can influence the price of its product by changing the quantity it is willing to sell. The extent to which an individual seller can exercise monopoly power depends on the availability of close substitutes for his product and on his share of total sales in the market. A firm does not need to be a pure monopoly to have monopoly power. A necessary prerequisite for monopoly power is that the demand curve for the firm's output is downward sloping rather than horizontal, as in competitive firm. When a firm has a downward-sloping demand curve for its product, it has the ability to raise or lower its price by changing the quantity it supplies. For example, although the Ford Motor Company does not have a pure monopoly on the production and sale of automobiles, it could have monopoly power if it could raise the price of its cars by offering fewer of them to dealers. She could do this if the demand curve for her cars were downward sloping. This could happen if enough buyers of Ford cars viewed them as significantly different products from competing cars. Ford could also influence the price of automobiles if its share of the total supply were large enough to make automobiles significantly rarer or more abundant in the market during a given period. In the extreme, limiting case, the demand curve for a product sold by a pure monopoly is a downward-sloping market demand curve for this product. The essential difference between a monopolistic market and a competitive market lies in the ability of a particular firm in a monopolized market to influence the price received for its product. A firm with monopoly power is a firm that sets the price of its product at its own discretion, rather than accepting it as a given, as a market reality. Market structure indicates the number of buyers and sellers, their shares in the total quantity of goods purchased or sold, the degree of standardization of the product, and the ease of entry into and exit from the market. Pure monopoly and perfect competition are two extreme forms of market structure. In a purely monopoly market structure, only one firm realizes the entire market supply of a particular product, and the emergence of other firms is impossible. In perfect competition, there are many firms, each with a small market share, and free entry into the industry is possible. Real market structures fall between these two extremes. Limiting cases, however, provide material for understanding many problems, which is useful for understanding intermediate options. Analysis of data related to market structure is used to determine the likelihood of whether firms in a market can influence the prices of the goods they sell.

3.3 Oligopoly

Oligopoly is the presence in the market of a small number of firms producing a given product that act together. One of the distinguishing features of oligopolies is that they are few in number and can influence the market individually. The simplest case of oligopoly is duopoly - the participation in the market of two producers of a certain product, each of which can independently fully satisfy the solvency of demand in the market.

There are oligopoly of the first type and oligopoly of the second type. Oligopoly of the first type, or pure oligopoly, is observed in industries with completely homogeneous products and large enterprise sizes. An example of a pure oligopoly is oil production companies. The second type of oligopoly, or differentiated oligopoly, occurs when several sellers sell differentiated products. This situation is observed, for example, economist P. Samuelson divided oligopolies into 2 types depending on the degree of control over price:

1) secret oligopoly. Occurs when oligopolists collude. The market price in a secret oligopoly corresponds to the situation of one monopolist.

2) dominant oligopoly - one of the oligopoly firms controls 60-80% of the industry market. In this case, other firms are guided by the price set by the leading company.

Typically, oligopolistic markets are dominated by two to ten firms that account for half or more of a product's total sales. The eight largest firms producing photographic equipment and accessories in the United States, for example, account for more than 85% of output. Of course, Kodak dominates the market. He, however, is not the only seller. The market for photographic equipment and accessories can be considered oligopolistic. In oligopolistic markets, at least some firms can influence price due to their large shares of total output. Sellers in oligopolistic markets know that when they or their rivals change prices or quantities produced, the consequences will affect the profits of all firms in the market. Sellers are aware of their interdependence. Each firm in the industry is expected to recognize that a change in its price or output will cause rival firms to react. Individual sellers in oligopolistic markets must consider the reactions of their competitors. The response that any seller expects from rival firms in response to changes in his price, output, or changes in marketing activities is a major factor determining his decisions. The response that individual sellers expect from their rivals influences the equilibrium in oligopolistic markets. The behavior of firms in oligopolistic markets can be likened to the behavior of armies in war. They are competitors, and the trophy is profit. Their weapons include price controls, advertising and output fixing. The small number of competitors forces them to consider each other's reactions to their decisions. They choose this strategy to increase their market shares and profits. In many cases, oligopolies are protected by barriers to entry similar to those discussed for monopoly firms. A natural oligopoly exists when a few firms can supply an entire market at lower long-run average costs than many firms would have. The existence of natural cases of oligopoly is a matter of debate among economists. It is widely believed that industries in which oligopolies exist include oil refining, steel smelting, and beer production. To summarize, we note that oligopolistic markets have the following features:

1. Only a few firms supply the entire market . The product they supply can be either standardized or differentiated.

2. At least some firms in an oligopolistic industry have large market shares . Consequently, some firms in the market have the ability to influence the price of a product by varying its availability in the market.

3. Firms in the industry are aware of their interdependence . Sellers always consider the reactions of their competitors when setting prices, sales targets, advertising expenditures, or other business measures. There is no single model of oligopoly. A number of models can be developed to explain how firms behave in specific situations based on what firms assume about how their rivals will react. The models described below show how an oligopoly tends to reduce profits due to competition. The destructive effect of oligopolistic rivalry on prices drives firms to collude to reduce competition and increase profits.

3.4Monopolistic competition

Monopolistic competition occurs when many sellers compete to sell a differentiated product in a market where new sellers may enter.

A market with monopolistic competition is characterized by the following:

1. The product of each company trading on the market is an imperfect substitute for the product sold by other companies.

Each seller's product has exceptional qualities and characteristics that cause some buyers to choose his product over that of a competing firm. Product differentiation means that the item sold in the market is not standardized. This may occur because of actual qualitative differences between products or because of perceived differences that arise from differences in advertising, brand prestige, or the “image” associated with owning the product.

2. There are a relatively large number of sellers in the market, each of whom satisfies a small but not microscopic share of the market demand for a common type of product sold by the firm and its rivals.

Under monopolistic competition, the market shares of firms generally exceed 1%, i.e. the percentage that would exist under perfect competition. Typically, a firm accounts for 1% to 10% of market sales during the year.

3. Sellers in the market do not take into account the reaction of their rivals when choosing what price to set for their goods or when choosing guidelines for annual sales.

This feature is a consequence of the relatively large number of sellers in a market with monopolistic competition. those. If an individual seller cuts his price, it is likely that the increase in sales will not come at the expense of one firm, but at the expense of many. As a consequence, it is unlikely that any individual competitor will incur significant losses in market share due to a reduction in the selling price of any individual firm. Consequently, competitors have no reason to respond by changing their policies, since the decision of one of the firms does not significantly affect their ability to make profits. The firm knows this and therefore does not consider any possible reaction from competitors when choosing its price or sales target.

4.The market has conditions for free entry and exit

With monopolistic competition, it is easy to start a company or leave the market. Favorable conditions in a market with monopolistic competition will attract new sellers. However, entry into the market is not as easy as it was under perfect competition, since new sellers often have difficulty introducing brands and services that are new to customers. Consequently, established firms with established reputations can maintain their advantage over new producers. Monopolistic competition is similar to a monopoly situation because individual firms have the ability to control the price of their goods. It is also similar to perfect competition because Each product is sold by many firms, and there is free entry and exit in the market.

CONCLUSION

So, competition is a confrontation, rivalry between producers of goods and services for the right to receive maximum profits; the existence of many producers and buyers on the market and the possibility of free entry into this market.

Pure competition is quite rare in practice. Rather, pure competition is a market model that has only analytical and some practical significance. This is a model that the market should strive for, and the state should create conditions for building such a model.

In a market economy there are four main market structures:

1. Pure competition.

2. Pure monopoly.

3. Monopolistic competition.

4. Oligopoly.

The modern market economy is characterized by coexistence, intertwining competition and monopoly. The modern economic mechanism is a combination of spontaneous market regulation with conscious management by monopolies and the state. One of its foundations is competition, but in modern conditions it is predominantly imperfect competition.

Perfect competition and pure monopoly are two extreme cases of market structure. Both are extremely rare. An intermediate and much more realistic stage is monopolistic competition. In this case, firms, although they face competition from other firms entering the industry or existing sellers, have some power over the prices of their goods. This market structure is also characterized by product differentiation, that is, many firms offer similar but not identical products.

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Market structure is a set of various forms, methods, features that can characterize market activity specific market sector.

Concepts about market structures

Market structures develop in parallel with the market; they differ in that each of them has its own type and model of competition. It should be noted that in market relations There cannot be a monopoly or its manifestation is not so bright. In view of this, the Russian state has issued laws to suppress the emergence of monopolistic structures that impede the development of market structures.

Definition 1

Market structure is understood as a whole system of signs and features that characterize the organization of the work of a particular industry market.

Today, competition is the main condition for the functioning of the market; competition increases every year, which leads to the search for new opportunities for the company. In view of this, companies are looking for new market structures with the least degree of competition so that they can influence the market and its structure.

The development of market structures is impossible under a monopolistic system. But, one way or another, they form and interfere with the development of the market and economic relations inside it.

Directions for improving market structures

There are several directions for the development of market structures:

Ridding the market of illegal private property. Market structures will not be able to fully develop until there is a redistribution of property, since often the owners are market monopolists, which is contrary to the laws of the country. It should be noted that most often the property of monopolists was obtained through dishonest means during perestroika;
Improvement of antimonopoly legislation. In our country there is legislation that prohibits the formation of a monopoly in today's market. But it should be noted that monopolies have existed and still exist; moreover, there are trends in the development of monopolistic companies. The state, in turn, is not guided by legislation, and it also has a number of shortcomings, serious enough that it does not allow punishing monopolists and reducing their activities;
Reduce barriers to entry into new markets. This circumstance hinders the development of market structures, since only a limited number of companies can enter the market, since for the rest the entry barrier is considered too high and unattainable. The reasons for the barriers may be various circumstances: high tax rates, strict business framework, pressure from monopolists, etc.

Note 1

Improving market structures necessary condition for the successful and efficient functioning of the market. The development of structures will make it possible to improve competitive relations within the market, create favorable conditions for companies to operate, make the products produced more competitive and of higher quality, etc.

Classification of market structures

Market structures are formed within the market, which can be described by two main types:

A market dominated by perfect competition;
A market dominated by imperfect competition.

Market structures are also classified according to market types:

Perfect competition of market structures. This type competition in market structures implies: a large number of companies (small and medium business), large companies there are no places in such competition; all manufactured products within the structure are homogeneous, that is, there is no differentiation of goods; any company can occupy a niche in a given market structure without interference or obstacles; all companies can equally have access to information about the market, consumers, competitors' prices, etc. This type of competition in the market is ideal. In modern market conditions, there is practically no such competition in market structures, only in very limited structures;
Imperfect competition of market structures. In this case, if at least one sign and element of perfect competition is violated, then automatically the competitive market structure becomes imperfect.

It should be noted that most often in economic terms perfect competition is also called pure monopoly. Pure monopoly of market structures. In this case, the market structure is dominated by monopolistic producers who have no competitors and produce goods in accordance with their views and preferences. In such structures, consumers play almost no role, since demand has little influence on supply; on the contrary, the manufacturer himself determines in what volume, at what cost and how to sell his product to the market. This type of competition is almost absent in our market structures; it exists in certain industries and not in its pure form, since the market of our country is competitive. The characteristics of perfect competition are also presented in the figure:

Figure 1. Perfect competition. Author24 - online exchange of student works

In addition to pure monopoly, oligopoly can also arise in market structures, when only a few firms operate in the market at a certain moment, that is, a limited number. In this type of competition in market structures, a large number of firms prevail in the market, but all of them are not dominant, since there are companies - concerns or syndicates that dictate “their own rules” of the game, since all other firms are not competition for them, but only “survive” in the created market conditions. In real conditions, oligopoly is a common phenomenon among market structures, the most negative thing is that the growth of oligopoly continues, and the state does not take any measures to curb this trend. The characteristics of oligopoly are also shown in the figure:

Monopolistic competition. In this case, market structures are endowed with a sufficiently large number of firms in the market, where each has its own small share of monopoly.

Monopsony is also called a market structure where there is only one buyer for the entire market.

The classification of market structure is based on determining the number of sellers and the nature of the product.

Pure monopoly and perfect competition are two extreme forms of market structure. In a purely monopoly market structure, only one firm realizes the entire market supply of a particular product, and the emergence of other firms is impossible. Real market structures fall between these two extremes. Limiting cases, however, provide material for understanding many problems, which is useful for understanding intermediate options. Analysis of data related to market structure is used to determine the likelihood of whether firms in a market can influence the prices of the goods they sell.

Based on these characteristics, markets are divided into the following groups according to organizational characteristics, that is, according to the degree of restriction of competition; four main models are distinguished:

1) a perfectly competitive market;
2) market of monopolistic competition;
3) oligopolistic market;
4) purely monopolistic market.

Economists distinguish several main market models according to the degree of restriction of competition, that is, according to the degree of monopolization.

Market competitiveness is a very important factor influencing the behavior of producers and consumers. Competitiveness is determined by the extent to which its participants can influence the prices of goods sold. The less such influence, the more competitive the market is considered to be. A brief description of these models can be reflected in the following points: in conditions of pure competition (perfect competition), there is a very large number of small firms producing a standardized (identical) product, and there are no barriers to entry into the industry, that is, the release of a product by any willing firm. In contrast, a pure monopoly involves a single firm as the seller, an undifferentiated product, and a variety of barriers to entry into the industry. Monopolistic competition is characterized by a relatively large number of large firms producing a differentiated product (say, clothing, shoes), and relatively free entry into the industry. An oligopoly is characterized by a small number of large sellers who have the ability to influence the price of goods, the volume of supply, and the difficulty of entering the industry.

Classification of market structures

Table 1 Classification scheme for market structures.

Each of the considered market characteristics influences the process of market price formation in its own way.

Therefore, for given functions of supply and demand, the specific level of market price also depends on the set of characteristics that form the market structure.