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 signs of perfect competition is not observed is called imperfect. The extreme case is pure monopoly, when only one firm dominates an industry, the boundaries of the firm and the industry coincide.

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

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

When a monopsonist buyer and a monopolist seller collide, we have bilateral monopoly. If there are only 2 firms in the industry, then this particular 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 the firm is a monopolist in the market where it acts as a buyer. In this case, firms set their own prices. For example, in the labor market, such a situation may arise when one employer dominates the market for a particular specialty or a market that is located in a special way. This may be the case when workers are guided in their choice of employers not only by motives related to salary but also, for example, the proximity of work from home. The term "monopsony" is taken from the ancient Greek language and means "one buyer".

Pure monopsony is rare, as is pure monopoly. It can exist in small towns where, 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 of its market offers, since the sale of this product to other buyers is prohibited.

Oligopsony - this is such a structure of the market for production resources, when a small number of firms buys the entire market supply of a certain production resource. Oligopsony is a type of market in which there are only a few buyers, who are opposed by a large number of sellers (manufacturers). Oligopsony is the opposite of monopoly. An example of oligopsony is professional sports leagues. Athletes can sell their services to a small number of firms. Oligopsony is similar to oligopoly in that competing firms understand their interdependence. In oligopsony, a few 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 he buys. 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 that has monopsony power in the market for inputs maximizes profit by purchasing the input up to the point where the marginal cost of the input equals the revenue from marginal product 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 sale and purchase;

Market entities;

The nature of the sales;

The level of saturation with the commodity mass;

Degree of demand satisfaction;

Legal compliance;

The nature of the range of goods;

Transport and geographical factor;

Industry sign;

Accounting for differences in customer needs, etc.

Let's consider these classifications in more detail.

1. The most common classifying feature that almost all economists distinguish 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 the nature of competition

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

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

The market of monopolistic competition 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.

The 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 response of competitors to changes in price or output. The small number of sellers is explained by the fact that it is difficult for new applicants to penetrate this market. Sergeev S.N., Rotova N.A., Kondrikova A.R. Pricing in various types of markets // Complex problems of the development of science, education and the economy of the region: Scientific and practical journal of the Kolomna Institute (branch) MSMU (MAMI). - 2012. - No. 1. - S. 48-50.

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

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

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

The market for factors of production. 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, human resources or labor means any intellectual or physical activity of a person aimed at achieving some useful result. Entrepreneurship is a special factor by which the above three factors of production are combined. Nizova L.M., Smirnova E.G. Factor Markets: Theory and Practice // Journal of Economic Theory. - 2011. - No. 3. - S. 180-188.

Another feature of the demand for factors of production is that their consumption is interconnected. They are not used separately and cannot function in isolation from each other. In 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. By the nature of sales, the market is: wholesale and retail.

The wholesale market, or the enterprise market, is the market of persons or organizations that purchase 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:

Enterprises that purchase goods for their subsequent processing;

Intermediary organizations that purchase goods for their resale in order to make a profit;

Government agencies that carry out procurement in order to ensure the performance of their functions.

Retail market - a property complex intended for the implementation of activities for the sale of goods (performance of work, provision of services) on the basis of prices freely determined directly at the conclusion of retail purchase and sale contracts and consumer contracts and including trading places.

4. According to the level of saturation with the mass of commodities and the degree of satisfaction of demand: the market is in equilibrium, scarce and excess.

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

6. By the nature of the range of goods:

A closed market where only the products of the first manufacturer 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 related to each other and aimed at satisfying one or more related needs;

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

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

7. By industry: car market; oil market; computer technology market, etc.

The process of complicating the structure of the market continues. Suffice it to point out that in the age of electronics, telephone-telex and computer markets are taking shape. Consider also the classification of the market proposed by Beketova O.N. (Table 2) Bektova O.N. Business planning. Electronic resource http://www.be5.biz/ekonomika/p005/toc.htm.

Table 2. Classification of markets

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

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

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

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

Having considered the main classifications of markets, we can conclude that the following types are highlighted in the market structure:

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

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

Financial markets, i.e. capital markets (investment markets), credit, valuable papers, monetary markets;

Intellectual product markets, where innovations, inventions, information services, works of literature and art act as objects of sale;

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

In real practice, the main types of markets are divided into various sub-markets, or market segments. Market segmentation is the division of consumers this product into separate groups with 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 regions, administrative divisions, population density, and climatic conditions.

Secondly, based on demographic factors, it is possible to group consumers by age, gender, family size, income level, occupational composition, educational level, religious affiliation, national composition.

Third, given the behavior various groups consumers, the following market segments can be distinguished: a) the purchase of goods is random; b) search for benefits when buying goods; c) the status of a regular customer; d) emotional (positive, negative, indifferent) attitude to the product.

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

Having considered various classifications of 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 ratios and proportions is exceptionally great.

The market is a complex multifunctional complex concept, including, on the one hand, the market for goods and services, and on the other hand, 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 of subjects economic activity, through which the overflows of goods, labor and capital are 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, functioning on the basis of the laws of value, supply and demand.

The main principles of the functioning of the market are:

Freedom of economic, economic activity;

Variety 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 ratio of supply and demand;

Competition;

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

The economic essence of the market is manifested in its functions: regulating, foaming, stimulating, distributing, informational, intermediary, sanitizing.

market equilibrium informational 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 Importance of the market of perfect competition………………….
	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 economy is of a market nature. The market system turned out to be the most efficient and flexible for solving the main problems. economic problems. It has been formed for more than one century, has acquired civilized forms, and, apparently, will determine the economic shape of the future in all countries of the world.

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

This goal considers issues such as:

1. Market structure: the essence of the main features;

2. Perfect competition;

3. Imperfect competition.

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

When writing this term paper, the literature of such authors as Braginsky SV, Vysokovsky A., Simpson T. and others was used.

The course work consists of three main sections.

The first chapter deals with the market structure.

The second chapter deals with perfect competition.

The third chapter deals with imperfect competition and what it consists of.

1. MARKET STRUCTURE MAIN FEATURES

1.1 General characteristics of market structures

Market structure is a complex concept with many facets. It can be determined by the nature of the objects of market transactions. There are markets for factors of production (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 the market structure is based on determining the number of sellers and the nature of the product.

The market structure indicates the number of buyers and sellers, their shares in the total, the amount of goods bought or sold, the degree of standardization of the goods, as well as the ease of entering and exiting the market. Pure monopoly and perfect competition are the two extreme forms of market structure. In a purely monopoly market structure, only one firm realizes the entire market supply of a particular product, while the emergence of other firms is impossible. Real market structures lie between these two extremes. Limit cases, however, provide material for understanding many problems, which is useful for understanding intermediate options. Analysis of market structure data is used to determine the likelihood that firms in the 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 that differ 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. According to these criteria, markets are divided into the following groups according to organizational feature, that is, according to the degree of restriction of competition, there are four main models:

1) the market of perfect competition;

2) the market of monopolistic competition;

3) oligopolistic market;

4) a purely monopolistic market.

Economists distinguish several basic market models according to the degree of competition restriction, 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 smaller this influence, the more competitive the market is considered. a brief description of These models can be reflected in the following points: in conditions of pure competition (perfect competition), there are 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 the product by any willing firm. In contrast, a pure monopoly involves a single firm as a seller, an undifferentiated product, and various barriers to entry into the industry. Monopolistic competition is characterized by a relatively large number of large firms that produce a differentiated product (say, clothes, 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, as well as the difficulty of entering the industry.

Before considering 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, monopsony (the monopoly of one buyer) is distinguished, when one buyer and many sellers dominate the market (the situation is rather extraordinary and extremely rare); oligopsony - the presence of several large buyers who have the opportunity to dictate the terms of the market, and a competitive market in which many buyers are represented.

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

To clarify 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 a market organization depending on the number and strength of 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 that define this market are the following:

1) a set of firms belonging to the category of small and producing homogeneous (homogeneous) goods;

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

3) the absence of restrictions for the intersectoral overflow of capital;

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

5) lack of price control by producers and consumers.

Strictly speaking, taking mercantilism as the initial chronological period, one has to deviate from tradition, because Western historians of economic doctrines deny their contribution to economic theory, and the physiocrats, who have established this role, 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 mechanism of regulation, which he called the "invisible hand", forms the prices of goods under the influence of demand, supply and competition. It should be noted that his main work “A Study on 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 the 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 the 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 natural order, did not consider the merchants and industrialists as a productive class, A. Smith overcame this limitation, which allowed the classics to expand the “functionality” of competition, giving it the role of a productive force and a factor of social development or progress, understood ever since the rise of public 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 the market environment, each individual manufacturer seeks to capture and secure a large market share for this type of product. This leads not only to an increase in profits, but also provides him with the conditions for survival in a competitive environment. Hence, the elimination of competitors is considered as 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 kinds of mergers and acquisitions, that is, the concentration of production. Moreover, both economic theory and the practice of functioning large enterprises, advocates an increase in the scale of production.

As for market states, more complex tasks had to be solved there, 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 the competitive market includes the classification of markets by types of competition and the analysis of the mechanisms of functioning inherent in each of these types. Since for the purposes of the course study, the analysis of mechanisms does not seem to be the main one, and the literary sources on it are quite common, we will focus on the classification.

Perfect competition exists in such areas of activity where there are many small sellers and buyers of an identical (identical) product, and therefore none of them is able to influence the 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 "free 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, finds the already established price level, which is beyond its power to change, because the market itself dictates the price at every moment of time. This situation allows new sellers on equal terms (price, technology, legal conditions) with existing sellers to start manufacturing products. On the other hand, sellers can leave the market quietly, which implies the possibility of an unhindered exit from the market. The freedom of "market" movement creates the conditions for the market to always change the number of producers. At the same time, the remaining sellers still lack the ability to control the market. Because they represent petty production and there are a lot of them.

2.2 Significance of the market of perfect competition

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

First, the model of a perfectly competitive market allows one to judge the principles of functioning of very many small firms selling standardized homogeneous products, and, therefore, operating conditions close to perfect competition.

Secondly, it is of great methodological significance, since it allows - albeit a valuable big simplification of the real market picture - to understand the logic of the company'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 expedient to dwell on the practical significance of the theory of perfect competition.

3. PERFECT 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 down and resembles the demand curves of entire industries, rather than the horizontal demand curve of every small perfect competitor in a perfectly competitive industry.

In a perfectly competitive market, there are many sellers and buyers, none of which 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 to produce at a level where marginal cost equals price.

However, in imperfectly competitive markets, individual sellers can influence the price they receive for their products. When considering how they can maximize their 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 these three types of markets, as well as in perfectly competitive markets, there are many sellers, each of whom is too small to have a noticeable effect on the market price by his own actions.

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

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

a) monopoly (pure). Production is concentrated on only one firm 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 firms. Each manufacturer is limited in its ability to control prices (partial control over them);

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

d) monopolistic competition. It is characterized by many manufacturers producing differentiated products, but homogeneous in functionality, and such differentiation can be both imaginary and real; price controls are very weak.

It is clear from the foregoing that there are two poles of market structures. The first is a perfectly competitive market. The second is 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. Indeed, it is very difficult to recognize the existence of a pure monopoly, for at least two reasons: firstly, one can always, or almost always, find a substitute or substitute product for monopoly products, and secondly, in an open international trade, it is possible to purchase a foreign product similar or close to it instead of a national 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, it is not easy to meet the requirements of free entry into the market. In addition, the producers of agricultural products themselves usually do not go directly to the market, that is, to the sphere of circulation, but work either under contracts or on exchange orders.

In this regard, it is necessary to single out the situation of the so-called natural monopolies. Strictly speaking, this is indeed a pure monopoly, but this is due not to artificial barriers to entry into the industry, but to reasons related to efficiency, when the activity of one firm is obviously more efficient than the presence of many competing organizations. In other words, we are talking about the scale effect. There are quite a few examples of natural monopoly: local provision of electricity, gas, and 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. Clearly, a “barrier to entry” is a condition that makes it difficult for new firms to enter an industry where established firms already exist.

Specialists in the theory of competition note, in general, the limited possibilities for the formation of prices for manufactured products by producers. This is important because even for imperfect competition, the market environment is quite efficient. However, it should be remembered that competitive fight is a process dating back to the distant past, a process that is badly or well, but 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 solvent demand is ensured, both consumer goods and consumer goods. The situation that has developed in our country is fundamentally different from the traditional market countries.

3.2 Pure monopoly

A pure monopoly is a situation where there is only one seller of a good that has no close substitutes. This term also refers to this single seller of goods. A monopoly-dominated market is in sharp contrast to a fully competitive market in which many competing sellers offer a standardized product for sale. Buyers who want to consume the 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) products that have no substitutes. The local electric company may be the only electricity seller in the area, but electricity has substitutes for many of its applications. 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 USA only at first glance is sole supplier mail delivery services. Its services may be replaced by an express delivery service, telecommunications, including electronic transmission of written messages.

It is rare that there is only one seller in the national or world 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 one. 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 the rough diamonds it buys each year and can influence the price of diamonds by controlling the quantity it offers for sale.

It is rather unusual, but a pure monopoly is more common in local markets than in national markets. For example, if you are attending college in small town, there can only be one seller of college textbooks. The bookstore would have a local monopoly on the sale of various textbooks. In the same way, in small towns there may be a single general practitioner or a single dentist, who then have a monopoly on medical and dental services in the area. You face local service monopolies on a daily basis because most communities have one telephone company providing local coverage. Similarly, local monopolies provide such public utilities like electricity, gas, transportation. 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 market share. 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, and not horizontal, as is the case for a competitive firm. When a firm has a downward sloping demand curve for its product, it has the ability to raise or lower the price by changing the quantity it offers. For example, although the Ford Motor Company does not have a pure monopoly on the manufacture and sale of automobiles, it could have monopoly power if it could raise the price of its cars by offering dealers fewer cars. She might do so if the demand curve for her cars were sloping down. This could happen if a sufficient number of buyers of Ford cars viewed them as products that were significantly different from cars from competing manufacturers. Ford could also influence the price of cars if its share of their total supply was large enough to make cars much rarer on the market or, conversely, abundant during a given period. In the extreme, limiting case, the demand curve for a product sold by a pure monopoly is a downwardly directed 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, and does not accept it as a given, as a market reality. Market structure indicates the number of buyers and sellers, their shares in the total amount of goods bought or sold, the degree of standardization of the goods, and the ease of entering and exiting the market. Pure monopoly and perfect competition are the two extreme forms of market structure. In a purely monopoly market structure, only one firm realizes the entire market supply of a particular product, while the emergence of other firms is impossible. In the case of perfect competition, there are many firms, each with a small market share, and free entry into the industry is possible. Real market structures lie between these two extremes. Limit cases, however, provide material for understanding many problems, which is useful for understanding intermediate options. Analysis of market structure data is used to determine the likelihood that firms in the market can influence the prices of the goods they sell.

3.3 Oligopoly

Oligopoly is the presence on the market of a small number of firms that produce a given product, which act together. One of the distinguishing features of an oligopoly is that there are few of them, and they can affect the market individually. The simplest case of an oligopoly is a 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.

Distinguish between the oligopoly of the first type and the oligopoly of the second type. Oligopoly of the first kind, or pure oligopoly, is observed in industries with perfectly homogeneous products and a large size of enterprises. An example of a pure oligopoly is oil companies. The second type of oligopoly, or differentiated oligopoly, is observed when several sellers sell differentiated products. This situation is observed, for example, the economist P. Samuelson divided oligopolies into 2 types depending on the degree of price control:

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 oligopolistic firms controls 60-80% of the industry market. In this case, the rest of the firms are guided by the price set by the leader company.

Typically, oligopolistic markets are dominated by two to ten firms that account for half or more of total product sales. The eight largest firms producing photographic equipment and supplies 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 seen as an oligopolistic one. In oligopolistic markets, at least some firms can influence the price due to their large shares in the total output. Sellers in oligopolistic markets know that when they or their rivals change prices or quantities of a product, there will be repercussions for the profits of all firms in the market. Sellers are aware of their interdependence. Each firm in an industry is expected to recognize that a change in its price or output will elicit a reaction from competing firms. Individual sellers in oligopolistic markets must reckon with the reactions of their competitors. The response that any seller expects from competing firms in response to changes in the price set by him, the volume of output, or changes in marketing activities, is the main factor determining his decisions. The response that individual sellers expect from their rivals affects the equilibrium in oligopolistic markets. The behavior of firms in oligopolistic markets can be likened to the behavior of armies in war. They are rivals, and the trophy is profit. Their weapons include price controls, advertising, and output fixing. The small number of competitors forces them to reckon with each other's reactions to their decisions. They choose this strategy to increase their market share and profits. In many cases, oligopolies are protected by entry barriers similar to those discussed for monopoly firms. A natural oligopoly exists when a few firms can supply an entire market at a lower long-run average cost than many firms would. The existence of natural cases of oligopoly is a matter of debate among economists. It has been argued that the industries in which there is an oligopoly include oil refining, steelmaking and beer production. Summing up, 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 . Resellers always consider the reactions of their competitors when setting prices, sales targets, advertising costs, or other business measures. There is no single oligopoly model. A number of models can be developed to explain the behavior of firms in specific situations, based on firms' assumptions 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 encourages 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 can enter.

A market with monopolistic competition is characterized by the following:

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

Each seller's product has exceptional qualities and characteristics that cause some buyers to prefer its product to a competitor's product product differentiation means that the item being sold on the market is not standardized. This may be due to actual quality differences between products, or to perceived differences that result from differences in advertising, brand prestige, or “image” associated with owning the product.

2. There are a relatively large number of sellers in the market, each of which 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 size of the market shares of firms, in general, exceeds 1%, i.e. the percentage that would exist under perfect competition. Typically, a firm accounts for between 1% and 10% of market sales during a year.

3. Sellers in the market do not consider the reactions of their rivals when choosing how to price their goods or when choosing annual sales targets.

This feature is still a consequence of the relatively large number of sellers in the market with monopolistic competition. those. if an individual seller cuts the price, it is likely that the increase in sales will come not from one firm, but from many. As a consequence, it is unlikely that any individual competitor will suffer a significant loss in market share due to a decrease in the selling price of any individual firm. Therefore, there is no reason for competitors to react by changing their policy, 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 take into account any possible competitor reaction when choosing its price or sales target.

4. There are conditions on the market for free entry and exit

With monopolistic competition, it is easy to start a firm or leave the market. Favorable market conditions with monopolistic competition will attract new sellers. However, entry into the market is not as easy as it would be under perfect competition, as new sellers often struggle with their new brands and services to buyers. Therefore, already existing firms with established reputations can maintain their advantage over new producers. Monopolistic competition is similar to a monopoly situation in that individual firms have the ability to control the price of their goods. It is also similar to perfect competition in that each commodity 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 maximize profits; the existence of many producers and buyers on the market and the possibility of free entry into this market.

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

There are four basic market structures in a market economy:

1. Pure competition.

2. Pure monopoly.

3. Monopolistic competition.

4. Oligopoly.

The modern market economy is characterized by coexistence, interweaving of competition and monopoly. The modern economic mechanism is a combination of spontaneous market regulation with conscious control by the 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, while facing competition from other firms in the industry or existing sellers, have some power over the prices of their products. This market structure is also characterized by product differentiation, that is, many firms offer similar but not identical products.

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The market structure is a combination 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 within each of them their own type and model of competition dominates. It should be noted that in market relations there can be no monopoly or its not so bright manifestation. In view of this, the Russian state has issued laws to prevent the emergence of monopolistic structures that impede the development of market structures.

Definition 1

The 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, every year the competition increases, 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 in order to have the opportunity to influence the market and its structure.

The development of market structures is impossible under a monopoly system. But, one way or another, they are formed and hinder 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 the monopolists of the market, which is contrary to the legislation of the country. It should be noted that most often the property of monopolists was obtained dishonestly 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 both existed and still exist, moreover, there are trends in the development of monopoly companies. The state, in turn, is not guided by the law, and it also has a number of shortcomings, quite serious, which does not allow punishing monopolists and reducing their activities;
Lower 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 barriers can be different circumstances: high tax rates, rigid framework for doing business, pressure from monopolists, etc.

Remark 1

The improvement of market structures is a 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 the work of companies, make the manufactured goods more competitive and of higher quality, etc.

Classification of market structures

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

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

Market structures are also classified according to the types of market:

Perfectly competitive market structures. This type of competition in market structures implies: a large number of companies (small and medium business), large companies have no place in such competition; all manufactured products within the structure are homogeneous, that is, there is no product differentiation; any company can occupy a niche in this market structure without interference and obstacles; all companies can equally have access to information about the market, consumers, competitors' prices, etc. This kind 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 economic terms Perfect competition is also called pure monopoly. Pure monopoly of market structures. In this case, the market structure is dominated by producers - monopolists who have no competitors, produce goods in accordance with their views and preferences. In such structures, consumers almost do not play a role, since demand has little effect 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 in our market structures is almost absent, it exists in certain industries and not in its pure form, since the market of our country is competitive. The characteristic of perfect competition is also shown in the figure:

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

In addition to pure monopoly, oligopoly can also arise in market structures, when only a few firms operate on the market at a certain moment, that is, a limited number. In this type of competition, market structures are dominated by a large number of firms on 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 do not compete for them, but only "survive" in the created market conditions. In real conditions, oligopoly is a frequent occurrence 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 characteristic of an oligopoly is 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 the monopoly.

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

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

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

On these grounds, markets are divided into the following groups on an organizational basis, that is, according to the degree of restriction of competition, there are four main models:

1) the market of perfect competition;
2) the market of monopolistic competition;
3) oligopolistic market;
4) a purely monopolistic market.

Economists distinguish several basic market models according to the degree of competition restriction, 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 smaller this influence, the more competitive the market is considered. A brief description of these models can be reflected in the following points: in conditions of pure competition (perfect competition), there are 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 the product by any willing firm. In contrast, a pure monopoly involves a single firm as a seller, an undifferentiated product, and various 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, as well as the difficulty of entering the industry.

Before considering 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, monopsony (the monopoly of one buyer) is distinguished, when one buyer and many sellers dominate the market (the situation is rather extraordinary and extremely rare); 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 varieties - the market of free competition (perfect competition) and the market of imperfect competition, which is divided into a monopolistic market, an oligopolistic market and a market of monopolistic competition.

Classification of market structures

Table 1 Classification scheme for market structures.

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

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