A monopoly is a type of market relations in which only one seller controls the entire industry for the production of goods of one type. There are no other suppliers of homogeneous goods in such a market.
That is, a monopolist in the market has the exclusive right to produce, trade and other activities. At its core, a monopoly prevents the emergence and functioning of spontaneous markets, and also undermines free competition.
Reasons for the emergence of a monopoly
It is impossible to understand what a monopoly is without examining the reasons for its emergence in the market. Ways of formation of monopolies are very diverse. In some cases, a larger company buys a weaker one; in others, the merger is voluntary. At the same time, manufacturing organizations can unite not only the same products, but also enterprises that do not have a common assortment and production technology.
The next way to form a monopoly in the market is the so-called "predatory" pricing. This term refers to the setting by the firm of such low prices that competing firms incur large costs, as a result of which they leave the market.
What is a monopoly? This is the main desire of every manufacturer and seller. The essence of monopolies is not only the elimination of a huge number of problems associated with competition, but also the concentration in one hand of a certain branch of economic power.
A monopolist is able to influence not only other participants in market relations, imposing its conditions on them, but also society as a whole!
What is a monopoly?
Monopolies are economic associations owned by private individuals and exercising sole control over certain sectors of the market in order to set monopoly prices on it.
Competition and monopoly are integral elements of market relations, but the latter hinders their economic development.
Characteristic features of a monopoly:
- The entire industry is represented by one manufacturer of this product.
- The buyer is forced to purchase goods from a monopolist or do without it at all. The manufacturer, as a rule, does without advertising.
- The monopolist has the ability to regulate the quantity of his product on the market, thus changing its cost.
- Manufacturers of similar products, when trying to sell them in a monopolized market, face artificially created barriers: legal, technical or economic.
The monopoly of an individual enterprise is the so-called "honest" monopoly, the path to which passes through a constant increase in production efficiency and the achievement of significant advantages over competitive enterprises.
Monopoly as an agreement - a voluntary merger of several large firms with the aim of ending competition and self-regulating pricing.
Types of monopolies
Natural monopoly arises for a number of objective reasons. A natural monopolist in the market is the manufacturer that best satisfies the demand for a particular product. At the heart of such superiority is the improvement of production technologies and customer service, in which competition is undesirable.
State monopoly arises in response to certain actions of the government. On the one hand, this is the conclusion of state contracts that provide the enterprise with the exclusive right to produce certain types of goods. On the other hand, the state monopoly is the association of state enterprises into separate structures that act on the market as one business entity.
Economic monopoly today is more common than others, which is explained by the laws of economic development. There are two ways to achieve the position of an economic monopolist:
- development of the enterprise by increasing its scale by constantly increasing capital;
- centralization of capital, i.e. voluntary or forced takeover of competitive organizations and, as a result, a dominant position in the market.
Classification of markets according to the degree of monopolization
According to the degree of restriction of competition, markets are classified into 2 types:
1. Perfect competition - characterized by the absolute impossibility of influence by its participants on the conditions for the sale of products, and mainly - on prices.
2. Imperfect competition. It, in turn, is divided into 3 groups.
- pure monopoly market - operates under conditions of absolute monopoly;
- oligopolistic - characterized by a small number of large producers of homogeneous goods;
- monopolistic competition market - implies the presence of a large number of independent sellers of similar, but not identical goods.
Advantages and disadvantages of monopolies
What is a monopoly? This is the company's leading position in the market, allowing it to dictate its terms. However, this is not its only drawback, there are others:
- The ability of a manufacturer to offset the cost of producing a product to their consumers by increasing the selling price.
- Lack of scientific and technological progress in production due to the lack of competitors in the market.
- Obtaining additional profit by the monopolist by reducing the quality of products.
- Replacing the free economic market with an administrative dictatorship.
Advantages of a monopoly:
- Increase in production volumes and subsequent reduction in costs and resource costs.
- Greatest resistance to economic crises.
- Large monopolists have sufficient funds to improve production, as a result of which its efficiency increases and the quality of manufactured goods increases.
State regulation of monopolies
Every economically developed state has faced the need to conduct an antimonopoly policy, the purpose of which is to protect competition.
The state plans do not include the general organization of free markets, its task is to eliminate the most serious violations in the market system. In order to fulfill it, conditions are created under which competition and monopoly cannot exist simultaneously, and the former is more beneficial for producers.
Antimonopoly policy is implemented through some tools. Monopoly regulation is carried out by encouraging free competition, controlling the largest producers in the market, promoting small and medium-sized businesses, and constantly monitoring prices.
Monopoly is a state of the economy in which a single entity that determines prices and quantity of a product dominates in a certain business niche. The model is considered the least efficient for the consumer, since the lack of competition causes stagnation and scarcity.
Monopoly is a natural or artificial state of the market, in which the means of production for one or more goods (services) are wholly owned by one player. A state, a private firm, an international organization can act as a monopolist. The exclusive right to extract a resource and process it, supply a product or provide a service can lead to both the protection of consumer rights and their violation.
In economics, the Herfindahl Index is used to assess the real state of affairs in the country and the world. This indicator shows the degree of concentration of a particular market in the hands of its specific players: the conditional value of HHI is calculated as the squared sum of the percentage of revenue from the total "pie" of each participant.
Pure monopoly, 1 participant: HHI = 100 2 =10000
2 players: HHI = 50 2 + 50 2 = 5000
10 players: HHI = 10 2 x 10 = 1000
The emergence and development of monopoly
Monopoly - what is it, what is the danger of the phenomenon? The desire to capture the market and extract maximum profit is natural for business. The first formations of this type arose in antiquity, when the rulers of cities and lands concentrated the production of certain goods in their hands. In Tsarist Russia, only the state (read - its leader) had the right to produce alcoholic beverages. And China had an exclusive technology for creating silks and porcelain - no one could offer analogues.
At the moment, nothing has changed significantly: monopolies are either created artificially or formed naturally. At the same time, excessive concentration of markets in the hands of one participant is recognized as unfair competition. In reality, it is not easy to influence the state of the economy, since impressive funds are required for changes.
Types of monopolies:
- Natural. A product or service is produced that has no analogues, and the development of an alternative requires too much one-time investment. This, for example, for a long time concerned rail and air transportation: the means of communication, concentrated in the hands of one owner, they excluded competition.
- Artificial. Measures to limit the number of participants are taken at the state level in order to ensure the quality standard of goods (services) and (or) consumer safety. This applies to gas transportation, storage of nuclear waste, etc. The register of such monopolists is presented on the website of the FTS of Russia.
- Open. After the invention of a new technology and the launch of its commercial use, the owner of the secret temporarily becomes the exclusive participant in the relationship with the consumer. For example, if the teleport principle is revealed in the near future, transport companies providing this service will be temporarily deprived of competitors.
Oligopoly
Oligopoly is a state of the market in which the right to extract a resource, process it, produce a product or provide a service has a limited number of participants. A classic example is the production of passenger aircraft, spacecraft, where competition is between two or three companies.
Advantages of monopolies:
- Implementation of a unified policy. For example, in Saudi Arabia, the concentration of the oil and gas complex in the hands of the state makes it possible to influence world oil prices by solving external problems.
- Ensuring high profits. Administrative regulation of prices allows the manufacturer to quickly recoup their costs, to get the most revenue.
- Consumer protection. In some cases, state regulation of production provides security to the least well-to-do sections of society.
Criticism of monopoly
Monopoly: what is it in simple terms? This is the desire of a group of people to completely take over the distribution channel, "to sit on the pipe." At all times, opponents of the excessive concentration of markets have argued in favor of the development of competition. The more companies vying for their share of the business pie, the better for the consumer.
15 years ago, when cell phones were produced exclusively by high-tech giants, only the wealthiest consumers could afford to buy them. Years later, offerings from hundreds of small companies have slowly but surely dropped the price of devices, while the level of gadgets has skyrocketed.
The monopolization of industries ensures the reduction of technical progress - the manufacturer has nothing to strive for. This was fully felt by the inhabitants of the USSR, where there were only a few large car factories, and the queues for cars were scheduled for years to come. As a result, Avtovaz produced the same models of vehicles for decades, and world progress moved forward, leaving the entire industry behind.
Thus, one more impartial part of the process is exposed - a severe shortage of goods and services. It can arise artificially or randomly (due to poor calculation) in a way. In the absence of competition, the producer himself decides how many goods he "throws out" for sale. And a glut of demand will mean a decrease in profits for such a giant.
Monopolization of markets in Russia
The list of sectors of the economy in which the concentration of a large share of profits in the hands of one participant is allowed is listed in the Federal Law No. 147 of 08/17/1995 - “On natural ...”. In these areas, strict state regulation is carried out through the establishment of marginal prices. The lack of competition has a negative impact on industries: this can be seen in the example of the Russian Railways Corporation.
All other manifestations of monopoly are pursued by state bodies and are not permissible. Antimonopoly authorities monitor the degree of concentration of markets in the hands of one or another player, collusion between large manufacturers of goods or service providers.
For 6 months of 2016, the antimonopoly services of the Voronezh region alone prosecuted violators on 12 facts of violation of the law (we are talking about the use of the dominant position of housing and communal services, power engineers), the total amount of fines amounted to 180 million rubles.
The main monopoly industries in the Russian Federation:
- Central water supply and sanitation (JSC Mosvodokanal, State Unitary Enterprise Vodokanal of St. Petersburg);
- Fuel and energy complex (JSC "Gazprom", JSC "Mosgaz" and others);
- Railway transportation (JSC Russian Railways);
- Airport services (JSC Vnukovo Airport, JSC SIA);
- Ports, terminals, inland waterways;
- Public postal and telecommunication services (for example, Federal State Unitary Enterprise "Post of Russia", OJSC "Moscow City Telephone Network");
- Disposal of radioactive waste (Federal State Unitary Enterprise “National Operator for Radioactive Waste Management”).
Monopoly game
A well-known fun for children and adults will help to experience all the delights of such an economic model. The tactical game, where participants "buy enterprises", upgrade them and charge a fee for passage through their territory, clearly demonstrates the danger of monopolizing the market. The most intelligent, prudent and successful businessman in the end remains in splendid isolation, crushing the entire game board under him.
Monopoly is the absolute predominance in the economy of a sole producer or seller of products.
Definition of monopoly, types of monopolies and their role in the development of the market economy of the state, the exercise by the state of control over the pricing policy of monopolists
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Monopoly is the definition
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Subject of natural monopoly
The subject of a natural monopoly is a business entity ( entity) any form of ownership (monopoly formation) that produces or sells goods on the market, which is in the state of natural monopoly.
These definitions are based on a structural approach; competition in some cases can be considered as an inexpedient phenomenon. The subject of a natural monopolist is only legal face carrying out business activities. Natural monopoly and state monopoly are different concepts that should not be confused, since the subject of a natural monopoly can function based on any form of ownership, and state monopoly is characterized, first of all, by the presence of state property rights.
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The areas of activity of subjects of natural monopolists are: transportation of black gold and oil products by pipelines; transportation of natural and petroleum gas by pipelines and its distribution; transportation of other substances by pipeline transport; transmission and distribution of electrical energy; use of railway tracks, dispatch services, stations and other infrastructure facilities that provide the movement of public railway transport; air traffic control; public connection.
"Silvinite" and " Uralkali» are the only potash producers in the Russian Federation. Both enterprises are located in the Perm Territory and develop one field - Verkhnekamskoye. Moreover, until the mid-1980s, they constituted a single enterprise. Potash fertilizers are in high demand on the world market due to limited suggestions, and the Russian Federation holds 33 percent of the world's potash ore reserves.
Monopoly is
In accordance with the general direction of the introduction of state regulation of the activities of natural monopolists, the obligations of subjects of natural monopolists are legally established:
Adhere to the established pricing procedure, standards and indicators of product safety and quality, as well as other conditions and rules for doing business, defined in licenses to carry out entrepreneurial activities in the areas of natural monopolists and in related markets;
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Maintain separate accounting records for each type of activity that is subject to licensing; - ensure, on non-discriminatory conditions, the sale of goods (services) produced by them to consumers,
Do not create obstacles to the implementation of agreements between producers operating in adjacent markets and consumers;
Submit to the bodies regulating their activities the documents and information necessary for the exercise by these bodies of their powers, in the amount and within the time limits established by the relevant bodies;
Provide officials of bodies regulating their activities with access to documents and information necessary for the exercise of their powers by these bodies, as well as to objects, equipment, land plots owned or used by them.
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In addition, subjects of natural monopolists cannot commit acts that lead or may lead to the impossibility of producing (selling) goods regulated in accordance with the law, or to replacing them with other goods that are not identical in consumer characteristics.
Monopoly
The issue of pricing needs special attention. politicians monopoly entities. The latter, as mentioned above, using their monopolistic position, have the ability to influence prices, and sometimes even set them. As a result, a new kind of price appears - the monopoly price, which is set by the entrepreneur occupying a monopoly position in the market, and leads to the restriction of competition and violation of the rights of the acquirer.
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To this, it should be added that this price is designed to generate super-profits, or monopoly profits. It is in the price that the profit of a monopoly position is realized.
The peculiarity of the monopoly price is that it deliberately deviates from the real market price, which is established as a result of the interaction of demand and suggestions. The monopoly price is upper or lower, depending on who forms it - a monopolist or a monopsonist. In both cases, the profit of the latter is ensured at the expense of the purchaser or the small producer: the former overpays, while the latter does not receive the part of the goods due to him. Thus, the monopoly price is a certain "tribute" that society is forced to pay to those who occupy a monopoly position.
Distinguish monopoly high and monopoly low prices. The first is established by the monopolist who has occupied the market, and the acquirer, who has no alternative, is forced to put up with it. The second is formed by a monopolist in relation to small producers, who also have no choice. Consequently, the monopoly price redistributes goods between economic entities, but such a redistribution, which is based on non-economic factors. But the essence of the monopoly price is not limited to this - it also reflects the economic advantages of large-scale, high-tech production, ensuring the receipt of super-surplus goods.
Monopoly is
The monopoly price is the maximum price at which a monopolist can sell a product or service, and which contains the maximum price. However, as experience shows, it is impossible to keep such a price for a long time. Superprofits, like a powerful magnet, attract other businessmen to the industry, who as a result “break” the monopoly.
It should also be taken into account that the monopoly can regulate production, but not demand. Even she is forced to take into account the reaction of buyers to price increases. You can only monopolize a product for which there is an inelastic demand. But even in such a situation, the rise in price of products leads to a restriction of its consumption.
Monopoly is
The monopolist has two possibilities: either to apply a small amount to keep the high price, or to increase the volume of sales, but already at reduced prices.
One of the variants of price behavior in oligopolistic markets is “price leadership”. The existence of several oligopolists, it would seem, should entail a competitive struggle between them. But it turns out that in the form of price competition it would only lead to general losses. Oligopolists have a common interest in maintaining uniform prices and preventing “price wars”. This is achieved through an implicit agreement to accept the prices of the leading firm. The latter is, as a rule, the largest organization that determines the price of a certain product, while the rest of the organizations accept it. Samuelson defines that "companies silently develop a policy that excludes intense competition in the price industry."
Other price options are also possible. politicians, not excluding direct agreements between monopolies. natural monopolies is under state control. The government constantly checks prices, sets limits, based on the need to ensure a certain level of profitability of the organization, development opportunities, etc.
Demand for a monopolist's product and monopoly
A company has monopoly power when it has the ability to influence the price of its product by changing the quantity it is willing to sell. The extent to which a monopolist can exploit its monopoly depends on the availability of close substitutes for its product and its market share. Naturally, a firm does not need to be a pure monopolist in order to have monopoly power.
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Moreover, it is necessary that the demand curve for the company's products be sloping down, and not be horizontal, as for a competitive organization, since otherwise the monopoly will not be able to change the price by changing the quantity of the product offered.
In the extreme, limiting case, the demand curve for sold by the pure monopolist coincides with the downward-sloping market demand curve for the good sold by the monopolist. Therefore, the monopolist takes into account the reaction of buyers to price changes when he sets the price for his product.
The monopolist can set either the price of his product or the quantity offered for sale at any given price. period time. And since he has chosen a price, the required quantity of the product will be determined by the demand curve. Similarly, if a monopoly company chooses as a set parameter the quantity of a product it supplies to the market, then the price that consumers pay for that quantity of product will determine the demand for that product.
The monopolist, unlike the competitive seller, is not the recipient of the price, and on the contrary, sets the price on the market himself. A monopoly can choose the price that maximizes it and leave it up to buyers to choose how much to buy a given product. The organization decides how many goods to produce based on information about the demand for its product.
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In a monopolized market, there is no proportional relationship between price and quantity produced. The reason is that the output monopoly decision depends not only on marginal cost but also on the shape of the demand curve. Changes in demand do not lead to proportional changes in price and supply, as happens with the supply curve for a free market.
Instead, changes in demand may cause prices to change while output remains constant, changes in output may occur without a change in price, or both price and output may change.
The impact of taxes on the behavior of a monopolist
As the tax increases marginal cost, the marginal cost curve MC will shift to the left and up to MC1, as shown in the figure.
The organization will now maximize its profit at the intersection of P1 and Q1.
Influence tax on the price and output of a monopoly firm: D - demand, MR - marginal profit, MC - marginal cost without accounting tax, MS - marginal flow rates with taking into account tax
The monopolist will reduce production and raise the price as a result of imposing a tax.
The effect of the tax on the monopoly price thus depends on the elasticity of demand: the less elastic the demand, the more the monopolist will raise the price after imposing the tax.
Monopolistic competition
Monopolistic competition is a common type of market that is closest to perfect competition. The ability for an individual company to control price (market power) is negligible here.
We note the main features that characterize monopolistic competition:
There are a relatively large number of small firms in the market;
These organizations produce a variety of products, and although the product of each company is somewhat specific, the buyer can easily find substitute products and switch his demand to them;
The entry of new firms into the industry is not difficult. To open a new vegetable shop, atelier, repair shop, significant initial capital is not required. The scale effect also does not require the development of large-scale production.
Demand for the products of firms operating under monopolistic competition is not perfectly elastic, but its elasticity is high. For example, the sportswear market can be attributed to monopolistic competition. Adherents of the Reebok sneakers organization are ready to pay a higher price for its products than for sneakers of other companies, but if the price difference turns out to be too large, they will always find analogues of lesser-known companies on the market at a lower price. The same applies to products in the cosmetics industry, the production of clothing, medicines, etc.
The competitiveness of such markets is also very high, which is largely due to the ease of entry of new firms into the market. Let's compare for example x the market of washing powders.
The difference between pure monopoly and perfect competition
Imperfect competition exists when two or more sellers, each with some control over price, compete for sales. This happens when the price is determined by the market share of individual firms. in such markets, each produces a large enough proportion of the commodity to significantly affect the supply, and hence the prices.
Monopolistic competition. occurs when many sellers compete to sell a differentiated product in a market where new sellers can enter.
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The product of each company trading in 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 that of a competing firm. product means that the item 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, prestige trademark or "image" associated with the possession of this product.
Monopoly is
There are a relatively large number of sellers in the market, each satisfying a small, but not microscopic, share of the market demand for a common type of product sold by the company and its competitors.
Sellers in the market place no regard for the reactions of their rivals when choosing how to price their wares 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. that is, if an individual seller cuts the price, then it is likely that the increase in sales will occur not at the expense of one organization, but at the expense of 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 company. 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 organization knows this and therefore does not take into account any possible reaction from competitors when choosing its price or sales target.
With monopolistic competition, it is easy to start a company or leave the market. Profitable conjuncture in a market 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 brand new to buyers and services.
Therefore, already existing organizations with an established reputation can maintain their advantage over new manufacturers. Monopolistic competition is similar to the situation of a monopolist, since individual companies have the ability to control the price of their goods. It is also similar to perfect competition in that each product is sold by many firms and there is free entry and exit in the market.
Monopoly in a market economy
Monopolists, unlike competitive markets, fail in the efficient allocation of resources. Volume money issue monopolists are less than desirable to society, as a result, they set prices in excess of marginal cost. Typically, the state responds to the monopolist problem in one of four ways:
Tries to turn monopolized industries into more competitive ones;
Regulates the behavior of monopolists;
Turns some private monopolists into state enterprises.
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The market and competition have always been antipodes of monopoly. The market is the only real force that prevents the monopolization of the economy. Where there was an efficient market mechanism, the spread of monopolists did not go very far. Equilibrium was established when monopoly, coexisting with competition, preserved the old and gave rise to new forms of competition.
But in the end, in most countries with developed market systems, the balance of the market and monopolists turned out to be unstable and necessitated antitrust policies aimed at protecting competition. Because of this, large organizations that are able to suppress any buds of competition often choose to refrain from pursuing a monopoly policy.
As long as monopoly markets exist, they cannot be left without state control. Thus, the elasticity of demand becomes in this situation the only factor, but not always sufficient, that limits monopoly behavior. To this end, an antimonopoly policy is being pursued. Two directions can be distinguished. The first includes forms and methods of regulation, the purpose of which is to liberalize markets. Without affecting monopoly as such, they aim to make monopolistic behavior unprofitable. This includes measures to reduce customs tariffs, quantitative restrictions, improve the investment climate, and support small businesses.
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The second direction combines measures of direct influence on the monopoly. In particular, these are financial sanctions in case of violation of the antimonopoly legislation up to the division of the company into parts. Antimonopoly regulation is not limited to any time frame, but is a permanent policy of the state.
Scale effect of monopolies
High-efficiency, low-cost production is achieved with the largest production possible due to market monopolization. Such a monopoly is usually referred to as a "natural monopoly". i.e., an industry in which long-run average costs are minimal if only one organization serves the entire market.
For example: production and distribution of Natural gas:
It is necessary to develop deposits;
Construction of main gas pipelines;
local distribution networks, etc.).
It is extremely difficult for new competitors to enter such an industry, as it requires large capital investments.
The dominant company, having lower production costs, is able to temporarily lower the price of products in order to destroy a competitor.
In conditions when competitors of the monopoly are not artificially allowed to enter the market, the monopolist can artificially restrain the development of production without loss of income and market share, making a profit only by increasing prices with a relatively stable number of sales due to the absence of competitors, demand becomes less elastic, that is, the price less impact on sales. This leads to resource inefficiency “the net loss to society when much less product and at a higher price is produced than consumers could have at that level of development in a more competitive environment. In a free economy, the windfall profits of the monopolists would attract new investors and competitors to the industry, seeking to replicate the success of the monopoly.
Monopolies in the labor market
An example of a monopolist in the labor market can serve as some industry trade unions, and unions at enterprises, which often put forward demands that were unbearable for the employer and unnecessary for employees. This leads to business closures and layoffs. A monopolist of this kind also cannot do without violence, both state and individual, expressed in legally enshrined privileges. trade unions in enterprises that oblige all employees to join and pay contributions. In order to meet their demands, unions often use violence against those who want to work on terms that do not suit the members of the union, or do not agree with their financial or political demands.
Monopolists that have arisen without violence and without the participation of the state are usually a consequence of the effectiveness of the monopoly in comparison with existing competitors, or they naturally lose their dominant position. Practice shows that in some cases a monopoly arises as a natural reaction of consumers to the useful properties of the product and / or lower cost than competitors. Each stable monopoly that arose without violence (including by the state) introduced revolutionary innovations that allowed it to win the competition, increasing its share both by buying up and re-equipping competitors' production facilities, and by increasing its own production capacities.
Antimonopoly policy in Russia
The problem of the need for state regulation of natural monopolists was recognized by the authorities only by 1994, when the rise in prices for their products had already had a significant impact on undermining the economy. At the same time, the reformist wing of the government began to pay more attention to the problems of regulating natural monopolies, not so much in connection with the need to stop price increases in the relevant industries or ensure the use of the possibilities of the price mechanism for macroeconomic policy, but primarily in an effort to limit the range of regulated prices.
The first draft of the law "On Natural Monopolies" was prepared by employees of the Russian Privatization Center on behalf of the State Committee for Administrative Offenses of the Russian Federation in early 1994. After that, the draft was finalized by Russian and foreign experts and agreed with sectoral ministries and companies (Ministry of Communications, Ministry of Railways, Ministry of Transport, Minatom, Minnats, RAO Gazprom, RAO UES of the Russian Federation, etc.). Many sectoral ministries opposed the project, but the SCAP and the Ministry of Economy managed to overcome their resistance. Already in August, the government sent a draft law agreed with all interested ministries to the State Duma.
The first reading of the law in the State Duma (January 1995) did not cause lengthy discussions. The main problems arose at parliamentary hearings and at meetings in State Duma committees, where industry representatives again made attempts to change the content or even prevent the adoption of the draft. Numerous issues were discussed: the legitimacy of granting regulators the right to control the investment activities of companies; on the boundaries of regulation - the legitimacy of regulating activities that do not belong to natural monopolists, but are associated with regulated activities; on the possibility of preserving the regulatory functions of the sectoral ministries, etc.
In 2004, the Federal Antimonopoly Loan was created to regulate natural monopolies:
In the fuel and energy complex;
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the Federal Service for the Regulation of Natural Monopolies in Transport;
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Federal Service for Regulation of Natural Monopolists in the Field of Communications.
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Particular attention was paid to the financial performance of the gas industry, the possibility of improving the state budget as a result of an increase in taxation of RAO Gazprom and the abolition of privileges for the formation of an off-budget fund, etc.
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According to the Law “On Natural Monopolies”, the scope of regulation includes transportation black gold and petroleum products through main pipelines, gas transportation through pipelines, services for the transmission of electrical and thermal energy, rail transportation, services of transport terminals, ports and airports, public and postal services.
The main methods of regulation were: price regulation, that is, the direct determination of prices for consumer goods or the appointment of their maximum level.
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Determination of consumers for compulsory service or establishment of a minimum level of their provision. Regulatory authorities are also charged with the duty to control various activities of natural monopoly entities, including transactions for the acquisition of property rights, large investment projects, the sale and rental of property.
International monopolies
During the nineteenth century, the capitalist mode of production spread rapidly throughout the globe. Back in the early 70s of the last century, the oldest bourgeois country, Britain, produced more fabrics, smelted more iron, mined more coal than the United States of America, Republic of Germany, France, combined. Britain owned the championship in the world index of industrial production and an undivided monopoly in the world market. By the end of the 19th century, the situation had changed dramatically. In the young capitalist countries, their own large one has grown. By volume industrial production index The United States of America ranked first in the world, and Federal Republic of Germany first place in Europe. Japan is the undisputed leader in the East. Despite the obstacles created by the thoroughly rotten tsarist regime, Russia quickly followed the path of industrial development. As a result of the industrial growth of young capitalist countries Great Britain lost industrial primacy and monopoly position in the world market.
The economic basis for the emergence and development of international monopolists is the high degree of socialization of capitalist production and the internationalization of economic life.
The iron and steel industry in the United States of America is dominated by eight monopolists, which controlled 84% of the entire production capacity countries by steel; of these, the two largest American Steel Trust and Bethlehem Steel had 51% of the total production capacity. The oldest monopolist in the United States is the oil trust Standard Oil.
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In the automotive industry, three companies are critical: General Motors,
Kreisler.
The electrical industry is dominated by two organizations: General Electric and Westinghouse. The chemical industry is controlled by the Dupont de Nemours concern, and the aluminum concern by Mellon.
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The vast majority of production facilities and marketing organizations of the Swiss food concern "Nestlé" is located in other countries. Only 2-3% of the total turnover comes from Switzerland.
In Great Britain the role of monopoly trusts increased especially after the First World War. wars when cartel associations of enterprises in the textile and coal industries arose, in the black metallurgy and in a number of new industries. The English Chemical Trust controls about nine-tenths of all basic chemicals, about two-fifths of dyes, and almost all of the country's nitrogen production. He is closely connected with the most important branches of British industry, and especially with military concerns.
The Anglo-Dutch Chemical Food Concern "Unilever" occupies a dominant position in the market
In the Republic of Germany, cartels have become widespread since the end of the last century. Between the two world hostilities, the country's economy was dominated by the Steel Trust (Vereinigte stalwerke), which had about 200 thousand workers and employees, the Chemical Trust (Interessen Gemeinschaft Farbenindustri) with 100 thousand workers and employees, the monopolist of the coal industry, the Krupp cannon Concern, electrical concerns General company.
capitalist industrialization Japan carried out at a time when Western Europe and the United States has already established an industrial capitalism. Dominant position among monopoly enterprises Japan conquered the two largest monopoly financial trusts - Mitsui and Mitsubishi.
The Mitsui concern had a total of 120 companies with a capital of about 1.6 billion yen. Thus, about 15 percent capital of all companies in Japan.
The Mitsubishi Concern also included oil companies, glass industry organizations, storage companies, trading organizations, insurance companies, plantation operating organizations (natural rubber cultivation), each industry amounted to about 10 million yen.
The most important feature of modern methods of struggle for the economic division of the capitalist part of the world is the organization of joint ventures, which are in common ownership of the monopolies of various countries, is one of the forms of economic division of the capitalist part of the world between monopolists characteristic of the modern period.
Such monopolists included the Belgian electrical engineering concern Philips and the Luxembourg-based Arbed.
The partners later set up their branches in the UK, Italy, the Federal Republic of Germany, Switzerland and Belgium. Thus, this is a new powerful breakthrough into the world market of competing partners, a new round of international capital movement.
Another well-known example of the creation of joint ventures is the creation in 1985 of Corporation"Westinghouse Electric" USA) and the Japanese organization "" of the joint company "TVEK" headquartered in USA.
Among modern monopolistic unions of this type there are agreements with a large number of participants. An example is the agreement on the construction of an oil pipeline, which is planned to run from Marseille through Basel and Strasbourg to Karlsruhe. This union involves 19 concerns from various countries, including the Anglo-Dutch Royal Dutch Shell, the British British Petroleum, the American Esso, Mobile Oil, Caltex, the French Petrofina and four West German concern.
The capitalist industrialization of the world played a big role in the development of the economy of the Russian Federation. Served as an impetus for the development of their own industrial enterprises.
The benefits and harms of monopolies
In general, it is difficult to talk about any public benefit brought by monopolists. However, it is impossible to completely do without monopolists - natural monopolists are practically irreplaceable, because the peculiarities of the factors of production used by them do not allow the presence of more than one owner, or the limited resources lead to the unification of the enterprises of their owners. But even in this case, the lack of competition stifles development over a long period of time. Although both competitive and monopolistic markets have disadvantages, the competitive market generally does better in the long run in the development of the respective industry.
Monopoly is
The monopoly of the economy is a serious obstacle to the development of the market, for which monopolistic competition is more characteristic. It involves a mixture of monopolist and competition. Monopolistic competition is such market situation when a significant number of small manufacturers offer similar but not identical products. Each company has a relatively small market share and therefore has limited control over the market price. The presence of a large number of enterprises ensures that collusion, concerted action by enterprises to limit production and raise prices is almost impossible.
Monopolists limit output and set higher prices due to their monopoly position in the market, which causes misallocation of resources and increases income inequality. Monopoly lowers the standard of living of the population. Monopoly firms do not always use their full potential to ensure ( scientific and technological progress). The monopolist does not have sufficient incentives to improve efficiency through scientific and technical progress because there is no competition.
Monopoly is
Monopoly leads to inefficiency when, instead of producing at the lowest possible level of marginal cost, the lack of incentives causes the monopoly to perform worse than a competitive organization could.
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capital that controls a significant part of the production and marketing of products, receiving a monopoly high (above average) profit on a sustainable basis.
Great Definition
Incomplete definition ↓
Monopoly
from the Greek monos - one, poteo - sell) - the exclusive right granted to the state, enterprise, organization or individual to carry out any activity; dominance in the market of goods and services by one producer or seller or a small group of sellers united in order to capture the market, oust competitors, and establish price control (see Concentration of production, Centralization of capital). M. concentrates in its hands a significant part of the production and marketing of goods and services, which allows it to establish a dominant position in the market and dictate conditions to the consumer, up to the establishment of a monopoly price, which is the basis of monopoly profit. M. is characterized by the fact that the entry into the industry of new manufacturers is excluded due to insurmountable barriers (patent M., M. for sources of raw materials, etc.); the price is determined solely by the monopolist; relations between M. and outsiders develop as relations of strong and weak (ie, the monopolist dictates the conditions for concluding contracts). M. is a large, highly concentrated, centralized production. Usually M. are large companies (firms, corporations) or their associations (cartels, trusts, concerns, consortiums, conglomerates) (see Cartel, Trust, Concern, Consortium, Conglomerate). The monopoly firm has complete control over production and the market. Pure M. is quite rare in life, mainly due to the operation of antitrust laws designed to ensure competitive conditions in the market (see Antitrust Law). It is obvious that such formations as technological M., state natural M., and those monopolistic structures that are based on the advantages associated with leadership in scientific and technological progress do not contradict the structure of the modern market economy and are fully compatible with it. But even areas of natural monopoly are by no means permanent. The monopoly regime is gradually losing its former advantages, which confirms the need for antimonopoly policy. The main negative consequences of the monopolization of the economy are: irrational distribution of resources; slowdown in scientific and technological progress; income inequality; threat to political democracy.
Great Definition
Incomplete definition ↓
Imagine that a certain enterprise is engaged in the production of unique products, which others have no analogues. It is the unique product that creates the status of a monopoly for an enterprise, since it has no competitors. Let us conclude that monopoly is a business, which is completely controls the release of a unique product and its price, as well as has no competitors due to the fact that others do not release this product.
Benefits of Monopoly
One of the most important benefits is market control. If in an oligopoly they look up to the price leader, then there is no need to look up to anyone - you produce products and set the price yourself. But setting it too high is unnecessary - as people will start looking for similar products with a low price. Moreover, it follows antimonopoly service, which controls the activities of monopolists. Therefore, not everything is so simple - monopolies cannot set a high price or set conditions for others, they must comply with antitrust laws.
Disadvantages of Monopoly
Probably control. FAS is already a disadvantage for a monopoly, but compliance with the law is necessary. If you approach from the other side, then the disadvantage of a monopoly may just be lack of competition, because if they are available, enterprises are trying to improve their product, thereby the process of development is underway. If there is no one to fight with, then why change something. Do not assume that a unique product will not change over time - it will happen more slowly.
How to enter the monopoly market
it very difficult. Usually monopolists are the largest enterprises, they not only control the market, they can also easily crush competitors, especially newcomers. And small firms simply lack the power that a monopolist has. It is unprofitable to have competitors, so it will not be difficult for a large company to crush a small enterprise. There are many ways to do this, but that's another topic.
Does a monopoly exist? Monopoly examples
Natural monopoly is rare in life. Usually it's infrastructure. Here are the monopolies, the railway (RZD). In fact, they are a monopolist in this area, since there are no other companies. Because of this, the quality of service does not improve. As trains ran 50 years ago, so they do now. And modern ones are very expensive and travel only through Moscow and St. Petersburg.
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