natural monopoly. Natural monopoly arises due to objective reasons

An industry is a natural monopoly if a single firm provides the market with a good or service at a lower cost than two or more competitors could. A natural monopoly arises when output above the required level is accompanied by economies of scale. The figure shows the average total cost of a firm with economies of scale. In this case, for any volume of output, the costs are minimal when the products are produced by a single firm. In other words, for any volume of output, an increase in the number of manufacturing firms leads to a decrease in the volume of output of each and to an increase in average total costs.

Rice. Economies of scale as the cause of monopoly. When a firm's average total cost curve is constantly decreasing, there is a so-called natural monopoly. In this case, if production is distributed among two or more firms, each firm produces less output, and average total cost increases. As a result, for any volume of output, costs are minimal when the producer is a single firm.

A prime example of natural- water supply of settlements. To provide water to the inhabitants of the city, the company must build a water supply network that covers all of its buildings. If two or more firms competed to offer a given service, each would have to bear the fixed costs of building its water pipeline. The average total cost of water supply is minimal when the entire market is served by a single firm.

Some products have the property of exclusivity, but are not the object of rivalry. An example is a bridge, the traffic on which is not particularly intense. The bridge has the property of exclusivity because the toll collector may not allow someone to use the service provided. However, the bridge is not an object of rivalry, since its use by the driver of one car does not reduce the possibilities of other motorists. Since in this case fixed costs for the construction of the bridge are inevitable, and the marginal cost of another trip across the river is negligible, the average total cost of a trip across the bridge (equal to the ratio of total costs to the number of trips) decreases with increasing number of trips. Therefore, the bridge is a natural monopoly.

If the firm is a natural monopolist, the chances of undermining its power by new competitors entering the market are minimal. Monopolies that do not have key production resources or are completely dependent on government decisions may feel insecure. Monopoly high profits attract new people who want to enter the market, and competition intensifies. On the contrary, the entry of a natural monopoly into the market is futile, since competitors are well aware that they will not be able to achieve the same low costs as those of a monopolist, because when a new company enters, the market share attributable to each of its subjects will decrease.

In some cases, one of the factors determining the emergence of a natural monopoly is the size of the market. Consider the bridge over the river again. When the population of nearby areas is small, the bridge can be a natural monopoly, as it fully satisfies the demand for low-cost travel across the river. However, as the population grows, the load on the crossing increases and to fully meet the demand, it is likely that one or more bridges will need to be built across the same river. Thus, with the expansion of the market, a natural monopoly can develop into a competitive market.

A monopoly in the economy is an industry in which, for some reason, there is no competition. It may be limited by law through a legal act or a patent, competition may be absent in a new industry with only one manufacturer.

However, there is a very special kind: a natural monopoly is an industry that needs the maximum number of consumers and that uses unique natural resources. If a conventional monopoly limits the creation of a free market, then a natural one is the most profitable option for the existence of this industry.

Types of monopolies: schematically

Speaking in the language of economic science, a natural monopoly is a state of the market when its maximum efficiency is possible only in the absence of competition. which are produced in these industries, cannot be replaced by any analogues, and the demand for them is maximally inelastic.

Even if the price of products of natural monopolies is significantly increased, demand will remain the same, and buyers will start saving on the purchase of goods from other groups. A natural monopoly in an industry is possible only if the costs of producing goods by one firm are lower than if two organizations were involved in this business. If the number of producers increases, the volume of production for each of them will become less, and the costs will only increase.

In Russia, as in other countries, today there are several industries in which a situation of natural monopoly has formed:

• Transportation of oil and oil products, as well as natural gas through main pipelines. The operation of such a transport network will be as efficient and profitable as possible if only one company is involved in this.
• Rail transportation. An example of a natural monopoly in Russia is the Russian Railways company - this is the only enterprise engaged in rail transportation, it also owns the entire transport network throughout Russia.
• Electricity and thermal energy transportation services. Similarly, in this industry, no organization can become a serious competitor to monopolists.
• Operation of transport terminals: airports, sea and river ports, etc.
• Services of water supply of cities, maintenance of work of municipal networks. The appointment of payment for utilities is under the constant control of the state, tariffs are formed taking into account a number of factors. At the same time, the end consumer has no alternative, he has to pay for water supply, sewerage, heat supply and other services at prescribed rates, and he cannot switch to another supplier.
• . In Russia, the FSUE Russian Post is a natural monopoly in the postal service and mail forwarding industry. Although there are several regional operators operating in the country, their share in the total number of services provided has been less than 1% for more than 10 years, and no changes are expected in the near future.

All industries listed are exclusive and not subject to antitrust laws. This is due to the fact that they are designed to protect the industry from low-quality competition, and in all cases their activities are regulated and controlled by the state.

The main features of a monopoly in the economy

Natural monopoly goods are indispensable

Any monopoly in the economy has a number of specific features that distinguish it from all types of competition and explain its special position in the market. Monopoly can be natural or artificial, but in any case it must meet several special criteria:

• The existence of only one company supplying goods or services to the market. This company can be formed with large investments of capital over a long period of time, such as, for example, the railway network in Russia. Naturally, no new organization will be able to invest as much to become stronger than a monopolist and quickly cover all costs.
• The product or service is so specific that there are no analogues for it. The consumer can only agree to the conditions set by the monopolist or even refuse the good he offers. The monopolist has the ability to set its own price.
• In a competitive environment, the price is formed by matching supply and demand, so it changes quickly. A monopoly company can dictate its terms at any time; in natural monopolies, the state plays an important role in pricing. The monopolist himself controls the entire volume of services or goods provided in this industry. That is, he forms not only the price, but also the offer, adjusting their ratio at his own discretion.

Reasons for the formation of artificial and natural monopoly

The concept of natural monopoly appeared in ancient times.

Such a form of industry organization as a monopoly has existed for a very long time, the term itself appeared in ancient times. The very first organizations arose as a result of the combined efforts of several manufacturers who captured the entire market and could independently set prices at their discretion.

Almost all civilized countries today have antimonopoly laws that regulate the situation on the market and prevent the capture of an entire industry by one company. However, it is necessary to distinguish between an artificial monopoly, which is the result of an agreement between manufacturers and a combination of companies, and a natural one, arising for objective reasons.

Not only will it not impede the development of the economy, but they are also a more profitable and efficient form of existence for it. The situation of natural monopoly is formed for several reasons:

• One firm produces a product or service at a lower average cost due to increased output. This allows you to reduce the price of the final product, and for the end user, this situation is much more profitable. An example is the city subway system or railways: if two carriers operate in the same direction, the income of each of them will be half as much, and because of this, the fare will have to be doubled.
• The difficulty of entering the market of a new enterprise with a similar offer. For example, in order to introduce another enterprise that supplies the city with water, an additional water supply network will have to be laid. This is not only extremely costly, but also useless, since the profit received will not pay off the investment even in the distant future.
• Limited market demand. The product of some suppliers is so specific that more than one manufacturer is enough for it. If there are more of them, the total profit will remain the same. An example is the production of military equipment or nuclear icebreakers: the demand for such products is completely dependent on the state, and in this industry a larger number of manufacturers simply will not survive.
• A natural monopoly is as stable as possible: if an artificial monopoly association can eventually break up into several competing firms, then the natural monopoly industry will remain unchanged for a very long time. A turning point in its work can only occur when new technological solutions appear or a sharp change in market demand.

An example of how a natural monopoly works

Natural monopoly is protected by the state

Consider the principle of operation of the Russian Railways company, one of the largest monopoly organizations in Russia. Today it is the only seller that provides the possibility of transporting goods and passengers by rail.

Even if another company acquires its own locomotives, it will be forced to use the existing transport network and coordinate its every action with Russian Railways.

The organization itself includes numerous subsidiaries, making it completely independent. These are their own design institutes, repair plants, trade organizations and much more, which should ensure the life of a giant company. Due to the sheer scale of competition in this industry, there is not and is not expected.

At the same time, the uniqueness of the services offered today remains controversial, since in addition to the railway one can use road, air and water transport. However, rail transportation is the most reliable and safest, in addition, it makes it possible to transport large consignments of goods, which means that they also do not have a full-fledged alternative. Other companies are closed to this market due to the huge costs of building their own transport network.

The position of monopoly is protected by the state, which is the sole shareholder of the company and fully controls its management.

The Russian Railways organization independently forms prices, and they are little dependent on fluctuations in demand. Based on all these signs, it can be confidently stated that the Russian Railways company is a natural monopoly in its field, and at the moment this is the most profitable option for the consumer in this industry.

A natural monopoly is a position in the market that does not hinder the development of an industry, but, on the contrary, makes it more profitable and efficient. The existence of such monopolies depends on a number of factors, and their appearance is due to natural objective reasons.

Natural monopolies: nationalization cannot be privatized - the topic of the video:

NATURAL MONOPOLY, a special market structure in which it is economically feasible to have a single enterprise that provides the entire market with a specific product (service); a pure monopoly in which the minimum efficient size of production is greater than the existing demand for its products. For example, the transportation of gas through pipelines can be called a natural monopoly; services for the transmission of electrical and thermal energy; rail transportation; services of transport terminals, ports, airports; public postal services.

Natural monopoly is characterized by: strong vertical integration; inelasticity of demand for goods (services) in the absence of substitute goods; high barriers to entry into the industry and high sunk costs; long payback period of investments; physical restrictions of the environment, limiting the number of companies in one territory.

Strong vertical integration is due to the fact that a natural monopoly ensures the functioning of the entire industry. For example, Russian Railways OJSC (RZD OJSC) includes not only a dense network of railways, but also railway stations, marshalling yards, rolling stock, repair depots, transport interchanges, a ticketing system, freight traffic regulation, etc. .

The inelasticity of demand for goods (services) in the absence of substitute goods means that in some cases it is quite difficult to find an adequate replacement for the products of a natural monopoly. For example, in a number of industries it is impossible to avoid the formation of monopolies. You cannot have two gas pipelines from two competing companies in your apartment, several heat transmission lines, alternative sources of electricity, etc. In most infrastructure sectors, the formation of monopolies occurs naturally, and the state is forced to regulate them directly or indirectly.

High barriers to entry into the industry and high sunk costs are due to the fact that it is impossible to create an alternative system, for example, rail transportation, in a short time (railroads began to be built in Russia since 1837 and have continued to improve since then). In addition, often the physical limitations of the environment do not allow the creation of a duplicate company in the same territory.

The long payback period of investments is due to the fact that objects of natural monopoly (for example, facilities for the transmission of electrical and thermal energy) have been created for decades.

There are traditional and modern mechanisms for regulating natural monopoly. Traditional mechanisms include: the rate of return on capital, the rate of return depending on the volume of output, on the volume of sales (income), on costs. However, all these methods do not help reduce costs, but, on the contrary, objectively lead to an increase in the cost of capital of natural monopolies and the capital intensity of production. Therefore, in the 1970s and 1980s, models of incentive regulation of natural monopolies were widely developed.

The goals of incentive regulation are: minimization of costs associated with the regulation process; the introduction of competition as a means of increasing efficiency; creating incentives for the regulated firm to reduce costs. Their implementation contributes to the efficient use of resources, available capacities, and encourages firms to innovate. Among the models of incentive regulation are the following.

price limits. Their essence is to set a fixed ceiling on the price set by the regulated firm. The purpose of this operation is to force the firm to cut costs. For example, in its operations, the American Telephone and Telegraph Company establishes three baskets of services: one for individual consumers and two for companies and businesses. At the same time, the price limit is indexed in accordance with the growth rate of GNP, minus 3% (which is the average growth rate of labor productivity in the United States).

"Yardstick" competition. This method is used to organize the regulation of water supply and electricity in the UK, where such companies are regional monopolies. Estimates based on the level of costs of other firms operating in similar conditions are used as a constraint. However, there is a problem of comparability.

Profit sharing schemes. This method encourages companies to increase the rate of return. However, it is beneficial for the state that the rate of profit does not exceed certain limits. Let's take as an example the electric power industry of the state of Indiana (USA); if the company's income does not exceed 10.6%, the company receives them; if the rate of return is more than 12.3%, then the company must lower prices and the benefits go to consumers. Revenues (ranging from 10.6 to 12.3%) are shared between the company and consumers.

Selectable rates. The firm must provide a certain set of services at regulated prices. However, it may itself offer the consumer an alternative tariff structure.

hybrid mechanisms. They may use the previous forms in certain combinations; for example, telecommunications regulation and gas transportation in the US in the early 1990s. The company sets an overall income limit, indexes rates, and reprices rates based on costs. The advantage of hybrid mechanisms is greater flexibility in terms of prices.

Since the mid-1980s, the liberalization of the reform of natural monopoly regulation in the United States and Canada began. There have been privatizations and measures taken to increase competition in the UK, New Zealand and Australia. There are two fundamentally different systems in the world.

In Eastern and Western Europe, gas pipelines are state-owned enterprises with a transport monopoly, they are included and integrated into the activities of the gas company. This practice exists in Italy, France, Belgium, the Netherlands, Denmark, Poland, Bulgaria and Romania.

In North America, on the contrary, main gas pipelines are the property of private or joint companies. They are managed independently of sellers and buyers, even in cases where they are owned by one or the other.

Open access to a natural monopoly (in countries such as the US, Canada, UK) stimulates competition because it gives any third party the right to purchase a transport service. The introduction of open access is possible on the basis of isolating the gas pipeline into a separate transport company. At the same time, it is necessary to separate two levels: the separation of transport functions from the functions of the trader; separation of services related to transportation from storage, brokerage, etc.

transport tariff. In countries where the gas producer owns the entire vertical gas chain (including gas pipelines) and has a dominant monopoly company (Italy, Belgium, the Netherlands, France), a separate transmission tariff does not apply. On the contrary, in countries where gas monopolies have been privatized (Great Britain) or where main gas pipelines are in the hands of private or joint-stock companies (USA, Canada), the issue of the transport tariff is a key one. Incentive regulation is also widely used (price limits, profit sharing schemes, etc.).

Reforming a natural monopoly is a lengthy and complex process. Even the most successful reform of the vertically integrated British Gas monopoly took 10 years.

In Russia, the Basic Provisions for Structural Reform in the Spheres of Natural Monopolies, approved by the Decree of the President of the Russian Federation dated 28.4.1997, provides for strengthening state regulation in the field of transportation, stimulating competition in potentially competitive types of economic activity and weakening regulation in them, developing contractual relations between suppliers and consumers. Examples of a natural monopoly are RAO UES, Gazprom, JSC Russian Railways.

Lit. : Temporary Regulations on the Register of subjects of natural monopolies, in respect of which state regulation and control are carried out, dated August 26, 2004 No. 59 // Rossiyskaya Gazeta. 2004. September 22; Antimonopoly regulation of vertical limiting contracts: Russian practice in the context of world experience / Edited by S. B. Avdasheva. M., 2004.

Natural monopoly arises due to objective reasons. It reflects a situation where the demand for a given product is best satisfied by one or more firms. It is based on the features of production technologies and customer service. Here competition is impossible or undesirable. An example is energy supply, telephone services, communications, etc. There are a limited number, if not a single, national enterprise in these industries, and therefore, naturally, they have a monopoly position in the market.

The main features of a natural monopoly are as follows:

1. The activities of natural monopoly entities are more efficient in the absence of competition, which is associated with significant economies of scale in production and high semi-fixed costs. Such areas include, for example, transport. The cost of delivering cargo or transporting one passenger is the lower, the more cargo or passengers are transported in this direction.

2. High entry barriers to the market, since the fixed costs associated with the construction of structures such as roads, communication lines are so high that the organization of a similar parallel system that performs the same functions (building roads and pipelines or laying railroad tracks is problematic) is unlikely whether can pay off.

3. Low elasticity of demand, since the demand for products or services produced by natural monopoly entities is less dependent on price changes than the demand for other types of products (services), since they cannot be replaced by other goods. These products meet the most important needs of the population or other industries. Such goods include, for example, electricity. If we propose that the increase in car prices will force many consumers to refuse to buy their own car and they will use public transport, then even a significant increase in electricity tariffs is unlikely to lead to a refusal to consume it, since it is difficult to replace it with an equivalent energy carrier.

4. The network nature of the market organization, that is, the presence of an integral system of networks extended in space through which a certain service is provided, including the presence of an organized network that requires real-time management and control from a single center.

There are two types of natural monopolies:

a) natural monopolies. The birth of such monopolies is due to the barriers to competition erected by nature itself. For example, a firm whose geologists have discovered a deposit of unique minerals and which has bought the rights to a land plot where this deposit is located can become a monopolist. Now no one else will be able to use this deposit: the law protects the rights of the owner, even if he ended up as a monopolist (which does not exclude the regulatory intervention of the state in the activities of such a monopolist).

b) technical and economic monopolies. This can be conditionally called monopolies, the emergence of which is dictated either by technical or economic reasons associated with the manifestation of economies of scale.

For example, it is technically almost impossible (or rather, extremely irrational) to create two sewerage networks in the city, supplying gas or electricity to apartments. It is not always rational to try to lay cables of two competing telephone companies in the same city, especially since they would still have to constantly turn to each other's services when a client of one network would call a client of another.

The largest monopolies are usually those in energy and transportation, where economies of scale are particularly pushing for firms to grow in order to reduce the average cost of producing goods. In reality, this is manifested in the fact that the creation in such industries, instead of one major monopoly firm, of a somewhat smaller size can lead to an increase in production costs and, as a result, not to a decrease, but to an increase in prices. And society, of course, is not interested in this.

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

Monopoly is the definition The history of the emergence and development of monopolies in Russia Characteristics of monopolies State and capitalist monopolies Types of monopolies natural monopoly Administrative monopoly economic monopoly Absolute monopoly Pure monopoly Legal monopolies Artificial monopolies The concept of natural monopoly Subject of natural monopoly Monopoly price Demand for a monopolist's product and monopoly supply Monopolistic competition Scale effect of monopolies Monopolies in the labor market International monopolies The benefits and harms of monopolies Sources and links

Monopoly is the definition

Monopoly is

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.

Monopoly is

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;

Monopoly is

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.

Monopoly is

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 an entrepreneur occupying a monopoly position in the market, and leads to restriction of competition and violation of the rights of the acquirer.

Monopoly is

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.

Monopoly is

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.

A 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, he himself sets the price in the market. 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.

Monopoly is

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.

Monopoly is

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 much 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. Consequently, 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 results in 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 monopolists, 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 the sectoral ministries and companies (Ministry of Communications, Ministry of Railways, Ministry of Transport, Ministry of Atomic Energy, 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. Regulators are also required 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 United Kingdom 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 coal industry monopolist, 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 alliance 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.

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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 guarantees that collusion, concerted actions of enterprises in order to limit the volume of production and raise prices is almost impossible.

Monopolists restrict 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.

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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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