Monopolies: examples in the world and in Russia. What is monopoly Artificial monopoly concept and types

Development and formation of monopoly in Russia

Monopolization is the whole process of conquering the market in order to occupy a dominant position on it.

Since ancient times, the concept of monopoly existed in Russia, as such the economic and political charter of society was sharply different from what we have today, but on the whole the monopoly system still had a pronounced form. So, during the reign of the tsars, the monopoly was on a number of the most important goods and products: salt, gunpowder, and even calendars. These goods were very necessary for the people of that society and it was difficult to get them, so the state set a quota for these goods and completely regulated the market in relation to them.

But in the days of the Soviet Union, the market was almost completely monopolistic, the state was at the head of the market, it regulated it, set prices for goods and products, controlled inflation, and the activities of all enterprises were influenced by the state.

In the early 1990s, a new government came to Russia, great changes came to the economy of our country, the market became not monopoly, but competitive. A lot of goods of various kinds and quality appeared on the market, a large number of enterprises, both manufacturing and trading, and it should be noted that the owners of these companies were individuals or legal entities, and not the state. During these years, the state finally lost control over the market, and the market began to develop "by itself."

Characteristic features of a monopoly market

The following features are inherent in the monopoly market:

There is only one product, but there are many buyers. Monopolist and a large number of buyers throughout the country. That is, the product is produced only by this company, and there are many buyers for it;
Lack of analogues. There are no products that could replace this product on the market, there are no similar products;
The inability to organize such a business. The existence of barriers for other companies in the development of the production of the same product, that is, entering the market is not possible or conditions are created that they simply cannot be overcome;
Not regulated pricing. The monopolist himself sets the price of the goods in the context of the reality of the market;
Full informational control of the market. The monopolist has complete information about changes in the market. This gives the monopolist confidence in its actions in the market, and also helps to manage the processes of pricing and marketing of products.

Artificial monopoly on the market

There can be only two types of artificial monopoly on the market:

Artificial monopoly, which is based on an increase in the concentration of production;
Artificial monopoly on the basis of granting various kinds of patents, licenses or intellectual property rights.

Definition 1

An artificial production monopoly is a process of conquering the market in an independent way due to such competitive factors as: modern and high-tech production facilities, the most effective production cost policy, a high level of management at the enterprise.

Remark 1

All this leads to the fact that the finished product for the consumer turns out to be the most competitive, since the price due to the listed factors is most likely the most affordable.

An artificial monopoly formed on the basis of obtaining patents or licenses is based on the fact that an enterprise gains a competitive advantage through a patent for the sale or production of know-how that other manufacturers do not have, thereby becoming a monopoly in the production of this product.

34 The main features of monopoly. Optimization of monopoly activities in the TC-TR and MR-MC models. Socio-economic consequences of the monopoly ..

Pure monopoly(from the Greek monos - one, polio - I sell) is a market in which one seller opposes many buyers. Monopoly assumes that one firm is the only manufacturer of any product that has no analogues. Therefore, buyers have no choice and are forced to purchase these products from a monopoly firm.

The purpose of the monopoly- obtaining super-profits by controlling the price and volume of production in the monopolized market by creating the most favorable conditions.

The main features of pure monopoly:

a) the only seller is the manufacturer;

b) there is no product differentiation, therefore, the absence of substitute products;

c) the seller has almost complete control over prices;

d) very difficult conditions for new enterprises to enter the industry - the entrance is blocked by finance, technological, resource, legal conditions;

e) the process of leaving the industry is also difficult;

f) the presence of economic and legal barriers to entry and exit from the industry.

Distinguish two types of monopolies by the way of formation (occurrence) - natural and artificial.

1. Natural monopoly - presented in the form of private owners and organizations, which include rare and freely non-reproducible economic resources (rare metals).

2. Artificial monopolies - these are associations created for the sake of obtaining monopolistic benefits. Artificial monopolies appear in the form of various monopoly associations. Artificial monopoly arises from collusion or suppression of competitors.

There are also types of monopoly from the point of view of the possibility of penetration into the industry due to the presence of protection from the state :

1. Open monopoly –Monopoly, in which one of the firms (at least for some time) becomes the only supplier of the product, but does not have special protection from competition.

2. Closed monopoly - a monopoly protected by legal norms that restrict competition: patents, licenses, copyright institute.

The firm's goal is to maximize profits, i.e. increase in the difference between gross income and gross costs:

P = TR-TC

To determine the level of output at which profits will be maximized, it is necessary to compare the firm's gross income and gross costs, or marginal income and marginal costs.

Comparing gross income and gross costs

In the interval of output from point K to point N, the firm receives economic profit, since income exceeds costs, maximizing it at the release of OM, where the maximum gap between the two curves. Points C and D - production critical points, since at these points the economic profit is zero, that is, the firm only reimburses costs from its income.

Comparison of marginal revenue and marginal cost.

When marginal cost is less than marginal revenue (MS< МR), каждая добавочная единица продукции увеличивает прибыль. Прибыль будет увеличиваться до точки Е, где растущие предельные издержки начинают превосходить предельный доход. Когда МС >MR (marginal cost exceeds marginal revenue), each additional unit of output decreases profit. Therefore, to maximize profits, the firm must expand output as long as marginal revenue exceeds marginal cost, and reduce production when marginal cost begins to exceed marginal revenue. The maximum profit is achieved when the marginal revenue, price and marginal cost are equal:

MR = P = MC

At point E, the firm reaches the optimal level of output and enters a state of equilibrium. It is unprofitable for the company to either reduce or expand production. In the event of a reduction in production, it will not receive a part of the profit that it could have, and in a situation of expansion of production, it will incur losses.

Socio-economic consequences of monopoly.

Economic implications- depreciation of the learning process, the cost of helping the unemployed, loss of qualifications, a decline in living standards. Advantages - creation of a labor force reserve, stimulation of the growth of labor intensity and productivity.
Social implications- exacerbation of the crime situation, increased social tension, increased social differentiation. Pros of increasing the value of the workplace.
Price discrimination- setting different prices for the same product, provided that the differences in prices are not associated with different costs. The goal of price discrimination is to maximize the total revenues of the firm at a constant level of total costs.
Antimonopoly policy of the state is a set of economic and administrative measures aimed at promoting and protecting competition and limiting monopoly manifestations. It includes both measures to prevent the emergence of new monopolies and measures against existing monopolies.
Antitrust Law- a set of regulations aimed at limiting the freedom of entrepreneurial activity and the freedom of contract of economically influential companies.
State regulation of natural monopolies carried out by various executive authorities. For example, in the fuel and energy complex, regulation of the activities of subjects of natural monopolies is carried out by the Federal Energy Commission of the Russian Federation; rail transportation; transportation to remote areas of the Russian Federation; services of transport terminals, sea and river ports and airports are regulated by the Ministry of Antimonopoly Policy and Business Support.

35 Antitrust policy against artificial monopolies.

1. Monopoly concept

2. Unlike natural, artificial (or entrepreneurial) monopoly develops in those industries where a single producer does not have increased efficiency compared to several competing firms . Establishment of a monopoly type market therefore, it is not inevitable for such an industry, although in practice it may develop if the future monopolist manages to eliminate competitors.

3. The use of the term "artificial (entrepreneurial) monopoly" in the economic and legal literature is distinguished by one more feature: this concept also unites dominance, which is quite rare on the market. the only one monopolist, and the more common situation of the predominance of several cooperating firms in one form or another, that is, if we use the terminology (see topic 8), we are talking about a pure monopoly and two types of oligopoly ¾ cartel and cartel-like market structure ... This broad interpretation of the term "monopoly" is justified by the fact that in all of the above cases, the dominant firms in the market, to one degree or another, are able to act as a whole, that is, they show signs of monopolistic domination of the market.

4. Objectives and Means of Antitrust Policy

5. The main goal of every antitrust policy is the suppression of monopolistic abuse. Towards natural monopolies these goals are achieved through direct government intervention in their activities, in particular, through compulsory pricing.

6. In case artificial monopoly the main direction of regulation is to counteract the formation of such monopolies, and sometimes the destruction of existing ones. To do this, the state uses a wide range of sanctions: these are preventive measures (for example, a ban on mergers of large firms), and various, and often very large, penalties for improper market behavior (for example, for an attempt to collusion with competitors), and outright demonopolization, i.e. That is, the compulsory splitting of the monopolist into several independent firms.

36Antimonopoly Policy Against Natural Monopolies

6. The main way of dealing with the negative consequences of natural monopolies is through state control over the pricing of natural monopoly goods and / or over the volume of their production (for example, by defining the circle of consumers subject to mandatory service).

7. The establishment by the state of economically feasible prices (for example, minimizing the intersectoral capital flow, ᴛ.ᴇ. taking into account the average profitability of enterprises in the country, correlated with real GDP growth) will increase the volume of production corresponding to the intersection point of the marginal cost curves (MS ) and marginal revenue (MR) (rule MC = MR).

8. If the price level set by the state is not associated with average costs, then the receipt of economic profits or losses may be consolidated. Both options are undesirable. The presence of permanent economic profits is tantamount to a tax on consumers (the demand for their products will decrease). Consolidation of losses leads to ruin, or the receipt of government subsidies (if the goods are socially significant).

9. The socio-economic efficiency of natural monopolies should be increased by changing the form of ownership and demonopolization (unbundling.).

10. Economic science has not developed an unambiguous assessment of these approaches. In many developed market states, natural monopolies are nationally owned, but no less countries where they are private.

11. Conventional Arguments for Nationalization˸ It is easier for a state-owned enterprise to pursue government policy on prices and output; state property excludes monopolistic abuses with the aim of enriching the owners. Arguments in favor of privatization are associated with fears of a decrease in the efficiency of a natural monopolist (there are dependent sentiments at a state enterprise (there is nothing to be afraid of losses, everything will be covered by the budget)) and an increase in the possibility of corruption

37. What are the advantages and what are the disadvantages of the method of price regulation of natural monopolies, focused on marginal costs? Explain and graph.

Maximizing the level of production (focus on marginal costs )
Price regulation of the activities of natural monopolies presupposes the compulsory fixing of the maximum value of prices for the products of the monopolist. Moreover, the consequences of this regulatory measure directly depend on the specific level at which prices will be fixed.
In fig. 10.4 shows a common regulation option, in which the highest acceptable price is fixed at the level of the intersection of marginal costs with the demand curve (P reg = MC = D).

The main consequence of setting the maximum price from the point of view of the behavior of the monopolist firm is the change in the marginal revenue curve. Since the monopolist cannot inflate the price above the named level, even with those volumes of production where the demand curve objectively allows it to do so, its marginal income curve from the MR position shifts to the MR 1 position (highlighted in the graph by the bold line), which coincides with the maximum allowed price value P reg. Indeed, if the maximum price of electricity is fixed at 80 kopecks. for 1 kW / h, then each additional kilowatt sold will bring income equal to this amount, and the marginal income curve will degenerate into a horizontal line passing at this level.
Rice. 10.4. Regulation of prices for products of a natural monopoly in order to maximize production
Further, the rule MC = MR comes into force. Like any other firm, the monopolist himself, without any government coercion (which is a large plus of this regulation technique!) will strive to bring the volume of production to Q reg, corresponding to the point of intersection of the curves of marginal income and marginal costs. In fig. 10.4, other advantages of this method of limiting monopolistic prices are clearly visible: a significant increase in production is achieved (Q reg> Q M) and prices are reduced (P reg< P М). Таким образом, главным плюсом данной методики регулирования является создание рыночного механизма, без дополнительного принуждения и контроля заставляющего монополиста увеличить производство и полностью покрыть спрос, который существует на товар при установленном государством уровне цен. По существу, миссия государства состоит лишь в том, чтобы верно выбрать потолок цен. Остальное сделает сам монополист. В результате принятых государством мер полностью исчезает мертвый груз монополии, т.е. удается устранить состояние, когда производителю выгодно продать, а покупателю – купить некий товар, но сделка не совершается из-за практикуемого монополистом недопроизводства.

But the described regulation method has and flaw: the price level set by the state has nothing to do with average costs, i.e., it can, by the will of the state, also secure the receipt of economic profits (Figure 10.4 a), and incurring losses (Fig.10.4 b). Both options are undesirable. Having a natural monopolist has permanent economic profits is tantamount to a consumer tax. By paying inflated prices, they increase their costs with all the ensuing negative consequences (reduced demand for their products, reduced competitiveness). But even more dangerous, perhaps, is the consolidation of losses. A natural monopolist can cover them in the long-term aspect only through government subsidies, otherwise it will simply go bankrupt. And this opens up a wide road for extravagance. As soon as there is no hope for profit one way or another, and the state will cover the losses anyway, the monopolist can benefit only by squandering public funds. The highest salaries for managers, bloated staff, huge hospitality costs are all hidden forms of enrichment at the expense of the treasury. In this case, x-inefficiency reaches its highest level.

What is the similarity and what is the difference in the behavior of a monopolist who pursues a policy of price discrimination and does not implement it? When would the impact of a monopoly market on public welfare be more adverse?

The profit received by the monopolist is equal to the area of the track PmMAPa, and it is also the maximum, but only if the monopolist sets a single price.

The net loss of profit is the "dead weight" - the MCN trip. Also, the loss of profit will be a trip to PbPmM.

Differences: Hence, 1 difference:- loss of part of the profit due to the establishment of a single price. Conditions for price discrimination: 1) the existence of different individual demand curves for different buyers; 2) the ability to separate groups of consumers with different demand curves; 3) the isolation of consumer groups.

2 difference: Effects price discrimination 1 degree: Expansion of production output; Increase in income and profits of the monopolist; Overpricing; The increase in the number of buyers is all persons who are able to cover the marginal cost and bring the seller at least some profit from each unit of production.

first degree price discrimination- the sale of each unit of product at the price of its demand, at the maximum price that consumers are willing to pay. Consequently, the situation becomes like perfect competition. Then the total amount of profit increases, the number of buyers increases, the output of products expands.

Price discrimination degree 2(nonlinear pricing) - a monopolist sells goods at different prices, but everyone who buys more pays less. The seller cannot determine the buyer's solvency, therefore, it gives the consumer the opportunity to choose the amount of the purchase himself. The most popular versions of price discrimination of the 2nd degree are: quantity discounts, cumulative discounts, fractional discounts.

Price discrimination 3 degrees consists in the fact that the manufacturer sells goods to different buyers at different prices, but each unit of production sold to a given customer always has the same price. For example, overpricing at elite points of sale, reduced travel on public transport for schoolchildren and pensioners

When the impact of the monopoly market on society will be more unfavorable, with or without price discrimination, it is impossible to say unequivocally. On the one hand, buyers pay more, on average, when prices are discriminated against, which is why additional profits for the monopolist arise. But, on the other hand, firstly, price discrimination creates more favorable conditions for poor people, since they do not have to pay a single price, and the goods get cheaper. And also in case of third-degree price discrimination, the principle “the poor pay less” applies, for example, upon presentation of an official document, students, pensioners are given discounts. And secondly, with prices of second degree discrimination, discounts are made for consumers who make large purchases and are therefore sensitive to price differences, i.e. "Buy more, pay less."

38. How is the degree of concentration of production measured? What indicators are used? Name and describe them.

To measure the level of market concentration, it is used concentration factor. It shows the percentage of sales in the total sectoral volume of a particular type of product for a certain number of the largest firms (usually four or eight). Metallurgical, automotive, defense, oil production and some other industries are characterized by a high level of concentration.

The disadvantage of the concentration ratio is that industries with different degrees of market monopolization can have the same ratio. For example, 24 firms can operate in one industry, one of which sells 77% of the total volume of production on the market, and the remaining 23 - 1% each. In another industry, there are five firms, each of which sells 20% of the products. The concentration ratio, calculated from the share of sales of the four largest firms, will be the same in both industries - 80%. However, in reality, the level of market monopolization in the first industry significantly exceeds the degree of concentration of sales in the second.

To eliminate this drawback, we use Herfindahl - Hirschman Market Concentration Index(//). It is determined by summing the squares of the market share of each firm in the industry. So, if the industry has NS different firms, the formula is as follows:

where R- market share of each of the firms in the industry,%;

NS- the number of firms in the industry.

As market concentration increases, the Herfindahl-Hirschman Index increases. So, if there are 100 identical firms in the industry, then H= 100. If there are 10 identical enterprises in the industry, then H = 1000. The index acquires the maximum value under conditions of pure monopoly when there is only one firm in the industry: # = 10,000.

In our previous example in the first industry H = 5952, in the second I = 2000, which indicates a higher level of market concentration in the industry where one firm sells 77% of all products.

One of the indicators of market concentration is also the Lerner monopoly power index (//.). This coefficient is based on the fact that monopoly power in the market is inversely proportional to the elasticity of demand for the firm's products, and is determined as follows:

where E- coefficient of elasticity of demand for products;

Rt- monopoly price; MS - marginal cost.

39 Describe the policy of price discrimination. Give a graphic interpretation and practical examples. - 40. Describe price discrimination and its types. Give a graphic interpretation.

Pigou in 1920 proposed to divide the well-known price discrimination schemes into three types. Price discrimination can be of the first, second and third degree.

A.S. Pigou distinguishes three degrees of price discrimination:

1. Price discrimination of the first degree (perfect discrimination).

In first-degree discrimination, each unit of the product is sold at its starting price in such a way that the minimum amount that he is willing to spend on the purchase of the desired product is drawn from each buyer, while the buyer will consider that he has made a bargain purchase. In other words, perfect discrimination prevents the consumer's surplus from being received and appropriates it entirely in the form of the producer's surplus.

In practice, perfect price discrimination occurs, as a rule, in the form of pricing of club goods. Club goods are goods, the consumption of which by one individual allows their simultaneous use by others, the main property of these goods is indivisibility in consumption. An example of a club good is, inter alia, a visit to a park, a golf course or playing tennis. In these cases, the perfect pricing of the good includes two parts: the payment by the consumer of a fee for the right to use the good (membership fee to the club that unites users of this good) and the price of the direct consumption of the good. The price of a product is set at the level of marginal costs of its production (at the level of equilibrium between supply and demand for a product in conditions of free competition), and the amount of the contribution is determined as the amount of consumer surplus in the market. Thus, what the consumer gains in the form of a low purchase price of the good, he loses in payment for access to the source of the sale of the good.

Rice. 8.1 Price Discrimination First Degree

Let's assume that marginal cost is constant. When carrying out price discrimination of the first degree, the monopolist sells the first unit of goods Q 1 at its reserved price P 1 the same goes for the second (sold Q 2 at the price P 2), and subsequent units of goods. In other words, from each customer the maximum is squeezed out of what he is willing to pay. Then the curve MR coincides with the demand curve D, and the profit-maximizing sales volume corresponds to the point Q n, since it is at the point E marginal cost curve (MS) intersects the demand curve D (MR) discriminatory monopolist.

Consequently, the marginal income from the sale of an additional unit of production in each case will be equal to its price, as in the conditions of perfect competition. As a result, the monopolist's profit will increase by an amount equal to the consumer's surplus (shaded area).

2. Price discrimination of the second degree.

In the case of price discrimination of the second degree, the prices of the goods depend on the purchase volume. The so-called non-linear pricing is observed, that is, a situation when the consumer's expenses for the purchase of goods are not proportional to the purchased volume, but depend on which price change scheme the seller has chosen.

The standard demand curve is represented by the DD "line, the marginal revenue curve by the DMR line. The marginal cost curve by the MC line. The average monopolist equates marginal cost to marginal revenue by setting uniform price OP M for all buyers selling OX m items. However, a price discriminating monopolist will be able to divide demand into ten parts as buyers' starting prices fall. There are buyers who want to buy P 1 K units at the highest possible starting price of OP 1; additional EF units will be purchased at a lower price of OP 2, and so on. The seller, setting for each group of goods a price approximately equal to the starting price, sees that it makes sense to expand the production of products until there are no such groups of goods, the starting price of which exceeds the marginal cost. Thus, the number of units of the OX D product will be sold at a total of seven different prices. The total profit is equal to the sum of the decreasing differences between the price and the average cost per unit of OS D for all units of goods sold. This is shown in the shaded portion of the figure. The profit from selling at discriminatory prices is significantly higher than the profit earned by exercising a conventional non-discriminatory monopoly (this profit is shown in the figure as a rectangle with a CMP height M and a width OX m).

Rice. 8.2. Second degree price discrimination

3. Price discrimination of the third degree.

Forms of manifestation of price discrimination of the third degree

Here, different categories of buyers are faced with different prices, but each group of buyers pays the same price for any unit purchased. There are several types of third-degree price discrimination.

1. Zone prices. Zone prices provide for price differentiation based on the time of purchase. Examples of zonal prices include higher rates during peak hours, discounts for customers during the busiest hours: afternoon dinners at restaurants versus evening dinners, cheap hotels in resorts in winter and expensive for kids.

2. Differentiation of prices depending on the status of the consumer. In this case, the status of the consumer serves as the basis for the appointment of a high or low price. For example, different prices can be set for the manufacturing and consumer sectors of the economy; for public and private enterprises; for internal and external consumers.

3. Differentiation of prices in relation to informed and uninformed consumers. The firm charges relatively high list prices for the item, but provides a discount if the buyer makes a complaint. The buyer's claims in relation to the value of the price (the quality of the service at such a price) characterize him as an informed buyer who knows the true situation on the market, therefore, worthy of implementing a special pricing policy.

4. Discrimination against consumers in relation to different estimation of time. The company provides for discounts on the price of the goods, but accompanies the price reduction with additional temporary conditions: you have to either wait for a long time to receive the goods (stand in line), or the purchase of goods is associated with a consumer's trip to a distant store of the company located in an inconvenient place. Consumers who are willing to pay more for the convenience of a nearby store and fast service face higher prices.

The essence of the manifestation of price discrimination of the third degree.

In fig. 8.3 shows the traditional graphical analysis of the discriminatory monopoly of the third degree in the A and B markets , the demand and marginal income curves of which are shown in graphs (a) and (b). The problem is that the last (unit of goods sold in market A , be sure to add the same amount to income as the last unit sold on the market V, those. is to equalize the marginal revenue in each market. To do this, we plot on the graph (c) the combined marginal revenue function CMR, summing along the horizontal axis - the values of the marginal revenue curves for each of the two markets. CMR turns out to be equal to the marginal cost of MC at the point corresponding to the profit-maximizing total output of OX C. To bring the marginal revenue to the value maximizing profit, we will draw horizontal line from the intersection of the MR and CMR curves. The volume of output in each market, therefore, will be determined by the point of intersection of the specified horizontal line with the MR curve of the corresponding market, and prices, as a rule, will be found using the corresponding demand functions linking the level of profit-maximizing output with a certain price level. Thus, in the market A with less elastic demand, the price will be set at the highest level of OR A, and in the more elastic market B, the lowest price of OR B will be established.

Rice. 8.3. Price discrimination of the third degree

41 Features of the formation of supply and demand in the resource market. Equilibrium in the resource market.

Factors of production are means that are used in the production of economic goods.

The classic factors of production are land, labor, capital .

The markets for the factors of production are, first of all, the markets for the services of these factors. When they are bought, it means that they are buying the services that they can provide.

Consider features of supply and demand of factors of production:

1. Demand for land, labor and capital is derived from consumer demand for a good or service, which are created using these factors. The more needed a given commodity and the larger the quantity required to meet the needs, the greater the demand for the resources from which this commodity is produced, and vice versa.

2. The factors of production are interchangeable that is, instead of one factor in a certain proportion, you can use others. The interchangeability of factors leads to the fact that with a change in the price of one product, other things being equal, the demand for others will change.

3. All factors of production are complementary , i.e. one factor involves the use of others. This means that the size of demand for each factor depends not only on the level of prices for it, but also on the level of prices for other resources.

Thus, the demand for resources is formed under the influence of a number of factors, the most important of which are:

Resource productivity (with an increase in resource productivity, the demand for this resource will increase, and vice versa);

The price of a product produced using a resource (if the price of a product rises, the demand for a resource increases, and vice versa);

The supply of production factors is formed under the influence of the characteristics of the factor being implemented:

1. Common to these markets is the limitation of all types of resources available in society in comparison with the needs of society. It is impossible to instantly increase the supply of a factor.

2. Different factors of production have unequal mobility and, as a consequence, different elasticity of supply.

3. Mobility of factors increases over time. The total supply of resources also increases over time.

If the interests of producers and consumers coincide, market equilibrium- the situation on the market, when the quantities of supply and demand coincide or are equivalent at a price acceptable to the consumer and producer. The economic meaning of this equilibrium lies in the fact that it reflects the unity of buyers and sellers, the equality of their opportunities and desires.

Due to an increase or decrease in demand and / or supply, changes occur in the equilibrium quantities of goods and equilibrium prices. As a result of the interaction of supply and demand, or the interaction of the demand and supply prices, the market price is established (Fig. 2.5).

Rice. 2.5. The equilibrium price and quantity of the product are determined

market demand and supply

It is fixed at the point at which the supply and demand curves intersect (point E). This point is called equilibrium point, and the price is equilibrium. Only at the equilibrium point, the price suits both the buyer and the seller at the same time. Indeed, it is unprofitable for producers to further increase prices and increase supply, since then the goods will not find demand. The consumer should also not count on a reduction in prices, since this is contrary to the interests of producers.

If the market price is below the equilibrium price, then deficit, in which the amount of demand exceeds the amount of supply. When the market price is higher than the equilibrium price, then excess of goods, at which the volume of supply exceeds the volume of demand. In other words, when the market price is higher than the equilibrium price, it leads to the formation of surplus and seller dissatisfaction. Underpricing, on the contrary, leads to the formation of a deficit and customer dissatisfaction. Inventories are increasing, overstocking is putting downward pressure on prices. This is the result of the fact that sellers have difficulties with the sale of products, which leads to a reduction in the amount of supply and causes the seller to competitively lower the price to the equilibrium price.

Thus, equilibrium price Is the price at which the quantity of goods offered on the market is equal to the quantity of goods for which demand is presented.

If the price rises above the equilibrium point, it will stimulate an increase in production. Competition will begin between the producers of this type of product, as a result of which a surplus of goods will form and the price for it will begin to decline, approaching the equilibrium point. On the contrary, if the price falls below the equilibrium point, it will intensify competition between buyers. This will lead to an increase in prices, an expansion of production and a return of prices to the equilibrium price.

Hello dear readers of the blog site. Monopoly is an economic situation in the market when the entire industry controls the only manufacturer (or seller).

The production and trade of goods or the provision of services belongs to one firm, which is also called a monopoly or monopolist... The subject has no competitors, as a result of which the company has a certain power and can dictate conditions to buyers.

Examples of monopolies

The word "monopoly" originated in ancient Greece and in translation means "I sell one."

The definition of monopoly implies the existence of a business niche where one manufacturer dominates, which regulates the quantity of goods and their prices.

Pure monopoly companies are very rare. This is due to the fact that a substitute can be found for almost any product or service.

For example, the natural monopoly is the metro... If the subway infrastructure is divided between two or three competing firms, chaos ensues. But when the metro services cease to suit the population, people will be able to get to their destination by buses, trams, cars, and electric trains.

That is, the metro is a monopolist among underground, high-speed transport, but in the field of passenger transportation it is not.

The state of the economy in which dominated by one subject, typical for housing and communal services, the public sector, production of products that require careful control.

Considering what a monopoly is, one cannot ignore another closely related concept - "oligopoly". This condition is much more common in the economy. Oligopoly market are shared by several companies. With the collusion of the main players, the market approaches the monopoly in its characteristics (for example, cellular operators).

Classic - aircraft and shipbuilding, weapons production. It happens here between two, three suppliers.

Types and forms of monopolies

The following forms of monopolies are distinguished:

Natural- arises when the business in the long term only serves the entire market. An example is rail transportation. Typically, economic activities are expensive at the initial stage.
Artificial- usually created when several companies merge. Collusion of businesses allows you to quickly eliminate competitors. The educated structure resorts to such methods as prices, economic boycott, price maneuvering, industrial espionage, speculation in securities.
Closed- protected from competitors by law. Restrictions may relate to copyright, certification, taxation, transfer of unique rights to own and use resources, etc.
Open- the only supplier that has no legal barriers to competition. Typical for firms offering new, innovative products that have no analogues at the moment.
Double-sided- a marketplace with one seller and one buyer. Both parties have power over the market. As a consequence, the outcome of the transaction depends on the negotiating ability of each participant.

There are other classification options, for example, they are divided into two types by ownership:

private
state

Or by territorial principle for 4 types:

local
regional
national
extraterritorial (global)

If we consider an artificial monopoly, when a number of enterprises (companies) are combined, then they say about the various forms of such mergers:

Monopoly in the history of the development of society

People noticed the benefits of monopoly almost immediately with the emergence of exchange and the emergence of market relations. In the absence of competition, prices for products can be raised.

Ancient greek philosopher Aristotle considered the establishment of a monopoly and management of the economy. In one of his works, as an example, the sage tells about a subject who received money “in growth”. To make a profit, an enterprising man bought all the iron in workshops, and then resold it at a premium to merchants who arrived from other places.

The Thinker also mentions attempts to regulate monopoly by the state. The cunning seller was expelled by the government from Sicily.

In European countries in the Middle Ages, monopoly developed in two directions - as a result of the creation of workshops and through the issuance of royal privileges:

Shop Is an association of artisans. He supervised the production of the products of the participants. The main task of the organization was to create conditions for the existence of artisans. The workshops did not allow competitors to enter their markets and set market prices for the goods produced.
Royal privileges gave the exclusive right to sell or produce certain types of products (services). Merchants and industrialists were happy to get such a privilege in order to get rid of competitors, and the king received money for the treasury. However, many royal decrees were absurd and stupid, which resulted in some countries.

In the 19th century, as a result of the rapid development of production, the competition between manufacturers intensified. Lower costs have led to the enlargement of factories and plants. Remaining players united in various communities(, pools) that acted as monopolists.

Monopolies in the history of Russia are a repetition of global trends. But most of the processes in our country took place late and were often brought from outside. So, in tsarist Russia, the production of alcoholic beverages was an exclusively state function.

And the first industrial syndicate originated in St. Petersburg in 1886 with the participation of German partners. He united 6 firms producing nails and wires. Later, a sugar syndicate was born, then Prodamet, Produgol, Roof, Copper, Prodvagon, etc.

Reasons for monopoly

The desire to monopolize the market is normal for any business. It is inherent in the very nature of entrepreneurial activity, the main goal of which is to maximize profits. Monopolies are created both naturally and artificially.

Additional factors contributing to the development of monopoly, can be:

large expenses for creating a business that do not pay off in a competitive environment;
the establishment by the government of legal barriers to doing business - certification, licensing,;
a policy that protects domestic producers from foreign competitors;
consolidation of firms as a result of acquisitions and mergers.

Antitrust Law

Lack of competition leads to negative consequences in society:

inefficient use of resources;
shortage of products;
unfair distribution of income;
lack of incentive to develop new technologies.

Therefore, the governments of the countries are trying limit the emergence of monopolies... Special government agencies monitor the level of competition in the market, control prices, and prevent small firms from becoming dependent on large players.

Antitrust laws exist in most countries in the world. It protects consumer interests and promotes economic prosperity.

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The essence of the term

The word "monopoly" in translation from Greek means "mono" - one and "polio" - I sell. This term means a situation on the market when only one company operates on it. At the same time, there is no competition at all or no one else produces similar goods or services.

The first monopolies in the history of mankind were created thanks to state sanctions. The government passed laws giving a privileged right to any firm to trade in this or that product. However, the term "monopoly" has many definitions. According to one of the versions, this is a certain state of the market, when the state or organization is given the exclusive right to conduct economic activities on it. At the same time, the monopolist, in the absence of competition, determines the cost of his goods himself or has a very significant effect on the pricing policy. This definition of the term is a qualitative characteristic of the market.

The main features of a monopoly

Experts identify the following situations, which indicate the presence of a single business firm:

the presence of one or a very large seller;
availability of products that have no competitive analogues;
the existence of high threshold criteria for the entry of new enterprises into a similar market segment.

There are other interpretations applied to the term "monopoly". For example, this concept can mean a separate company, which is characterized by priority in the management of a certain market segment.

Interpretation options

The term "monopoly" is understood as:

the state of either the market or one of its segments in which only one player is present;
the only company that produces and sells goods created by it;
the market with the only leading enterprise present on it.

The uniqueness of a particular company is determined by many criteria. However, the most basic of these is the level of competition. It should be either low enough or absent altogether.

Classification

There are different types of monopolies. However, their classification is very conditional. This is due to the fact that some forms of monopolies can simultaneously belong to several of their types. So, there are:

natural monopoly, when an economic entity occupies a privileged position in the market;
pure monopoly, when there is only one supplier of certain or goods;
a conglomerate is several entities of a heterogeneous type, but mutually financially integrated (ZAO Gazmetall can serve as an example in Russia);
a closed monopoly that has protection from competition in the form of legal restrictions, patents and copyrights;
an open monopoly, which differs in that there is only one supplier of the product on the market that does not have special protection against competition.

In addition to the above, there are other types of monopolies. Let's consider some of the types of this phenomenon.

Natural monopoly

Quite often a situation arises in the market when the demand for a particular product is satisfied by one or several companies. In this case, a natural monopoly arises. Its reasons lie in the peculiarities of customer service and the technological process.

Natural monopolies exist in any country on our planet. Examples of this are telephone services, energy supply, transportation, etc.

Natural monopolies also work in the field of:

transportation of oil products, gas and oil through main pipelines;
services to provide the population with public postal and electrical communications.

Take the power industry, for example. There is also a natural monopoly here. Examples in Russia are 700 existing CHP, GRES and HPPs, which were merged into RAO UES of Russia. The company was formed in 1992, when fifty of the newest power plants were removed from the territorially subordinated regional energos. Today RAO "UES of Russia" owns the entire power transmission network in the country.

The natural monopoly has also not spared the gas industry. Examples in Russia are eight associations and thirteen regional transport enterprises for its transportation, united in RAO Gazprom. This company accounts for a quarter of all state budget revenues.

OAO Gazprom carries out 56% of supplies to Eastern and 21% to Western Europe. He also has assets abroad, which are stakes in companies that own gas distribution and gas transmission systems.

The natural monopoly in Russia is the railway industry. The share of the track facilities of JSC Russian Railways, as well as cargo turnover, is 80% of all traffic in the country. The share of passenger traffic is also high. It is 41%.

There are other natural monopolies in Russia as well. Examples of this are OJSC Rosneft, OJSC Rostelecom, etc.

Examples of natural monopoly in the world are somewhat different from those in Russia. In the legislative acts of Western countries, terms are used such as:

public service;
a service that everyone needs;
network service, etc.

So, in Great Britain there is no legal definition of the term "natural monopolies". Examples of societies that are “needed by all” include railway structures, electricity transmission and distribution, water supply and sanitation. And in France, the term "natural monopolies" is enshrined in the concept of "commercial and industrial public services." These are organizations working in the field of communications, rail transport and electricity supply.

A natural monopoly in Germany is a situation where one company is able to meet the market demand by providing a product or service with a low price, but at the same time providing a normal level of profitability. This applies to pipeline and rail transport.

Artificial monopoly

This concept is very capacious. According to some experts, the natural monopoly described above is one of the subspecies of economic (artificial) monopoly. In this case, we are talking about such companies that were able to gain a leading position in the market.

How does an artificial monopoly arise? Examples of the emergence of dominant enterprises indicate the likelihood of two ways to achieve the goal. The first of them lies in the successful development of production, as well as in the concentration of capital, and, as a consequence, in the increase in the scale of activity. The second way is faster. It is based on the centralization of capital, that is, a voluntary merger or takeover of bankrupt organizations. At the same time, the mass of small and medium-sized enterprises turns into larger ones. An artificial monopoly arises. It covers a certain segment of the sales market and has no competitors.

Artificial monopolies are now widespread. Examples of such associations are concerns, trusts, syndicates, and cartels. Every entrepreneur strives to conquer a monopoly position. It allows you to eliminate a number of risks and problems associated with competitors, as well as to gain a privileged position in the market. At the same time, the monopolist is able to influence other market participants and impose their own conditions on them.

An artificial monopoly can be created in another way. The state, by its legislative acts, is capable of granting the right to manufacture products or provide services to only one enterprise. This also creates artificial monopolies. There are examples of this in most countries of the world. These are organizations based on state preferences. An example in Russia is the Mosgortrans company. It provides the capital with land transport. At the same time, the government does not give permission to work on the market for other carriers, its competitors.

State monopoly

Its creation is carried out with the help of legislative barriers. The legal documents define the commodity boundaries of the subject of the monopoly and the forms of control over it. At the same time, some companies are given the exclusive right to carry out a particular type of activity. These organizations are state-owned. They are subordinate to central administrations, ministries, etc. The state monopoly groups enterprises in the same industry. This leads to a lack of competition in the sales market.

They exist in Russia. Examples of regulated activities are provided below. They include:

activities related to the circulation of psychotropic and narcotic drugs;
work in the field of military-technical regulation;
emission of cash and organization of their circulation on the territory of Russia;
branding and testing of items made of precious metals;
production and circulation of ethyl alcohol;
export and import of selected goods.

Where is the state monopoly most clearly manifested? Examples of the use of administrative power can be seen in various fields. This is the Bank of Russia. He has a monopoly on the organization, circulation and issue of cash. Such a right is given to him by legislative acts.

There is also a government monopoly in health care. Examples relate to the production of drugs. Thus, the Federal State Unitary Enterprise “Moscow Endocrine Plant” has monopoly rights. It manufactures drugs that are used in various fields of health care. These are psychiatry and gynecology, endocrinology and ophthalmology.

The space industry also has a state monopoly. In Russia, examples relate to various objects in this area, the most striking of them is the Baikonur cosmodrome.

Pure monopoly

Sometimes a situation arises in the market when a new company appears in the consumer sphere, offering a newly created product that has no analogues. This is pure monopoly. Examples of such situations are currently few and far between. Today this phenomenon is quite rare. More often several firms compete with each other. At present, as a rule, only with the support of the state can a pure monopoly exist. In this case, examples can be given only for entities offering their products on local markets. The simplest of them is when a firm dictates its price to consumers. However, the value of services or goods of pure monopolies can be controlled by the state. At the same time, such business entities will be protected from other sellers from entering the sphere of their activities by state legislative acts.

A typical example of a pure monopoly is the activities of the Aluminum Company (USA). In 1945, this firm completely controlled the production of bauxite in America. This is the main raw material for the production of aluminum.

A vivid example of a pure monopoly in Russia is local companies for electricity and gas supply to settlements. In addition, these are companies that maintain water supply networks. Utilities are the most successful examples of such businesses around the world.

Open monopoly

A situation may arise on the market when a company starts to release a completely new product. But unlike a pure monopoly, the state does not protect it from potential competitors. In this case, an open monopoly arises, which can be attributed to one of the types of pure monopoly. For a period of time, the company is the only supplier of a new product. Competitors of such companies appear on the market a little later.

If you give examples of open monopoly, then it is worth remembering Apple, which was the first to offer the consumer touch technology.

Bilateral monopolies

Sometimes a situation arises in the market when a product is offered by a single seller, and demand exists from a single buyer. This is a bilateral monopoly. In such a situation, the buyer and the seller know each other. At the same time, they carry out the purchase and sale of finished products under strict price control. Examples of bilateral monopoly relate to situations where a firm sells its goods to the state. This is the purchase of weapons by the Ministry of Defense, and the opposition of a single trade union to any one employer.

Conclusion

The classification of monopolies is conditional. Some companies are very difficult to attribute to one or another type of business entity. Many of them belong to several types of different monopolies at once. Business entities serving telephone networks can serve as an example of this. This also includes gas and electricity companies. All of them have signs of not only natural, but also closed monopoly. Examples can apply to other areas of activity as well.

However, the position of a business entity often changes dramatically. Thus, the existing advantages of natural monopolies are not their integral part. The market position of such business entities may undergo changes in the development of new technologies by competitors. The position of closed monopolies is not stable either. All benefits and privileges given to them can be canceled by newly introduced legislative acts.