natural monopoly. Monopoly: definition and types

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.

The concept and spheres of existence of natural monopoly

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 complete absence of competition. Goods that 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 and services 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 petroleum 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. Water supply services for cities, ensuring the operation of utility networks. Assigning a fee for public 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. Postal communication. 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. MAIN SIGNS OF MONOPOLY IN THE ECONOMY

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

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. A natural monopoly situation is formed for several reasons: One firm produces a product or service at a lower average cost due to increased production volumes. 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.

Introduction.

1. Causes of natural monopoly.

2. Ways to regulate natural monopoly.

List of used literature.

Introduction

The word "monopoly" is the result of the addition of two Greek words: monoz ("one") and pwlew ("sell") = and literally means "one seller". But in colloquial speech, a monopoly is often called the exclusive right to something.

A monopoly is a situation in an industry in which 1) there is only one firm in the industry, 2) the good that it produces has no close substitutes, 3) there is no possibility of other firms entering the industry.

Such a firm, which has no "neighbors" in the industry, is the complete master of the position in the market of its good. The output of this firm is the output of the entire industry, and the supply of this firm is the supply of the entire industry.

Thus, a monopolist (as a firm that has no competitors is called) has a unique opportunity to choose how much the ENTIRE industry will produce.

Moreover, the only firm in the market can choose the price of the good. A monopolist does not have to make decisions at a given price (as opposed to a competitive firm). He is given a market demand curve for his products, the position of which is determined by circumstances beyond his control (preferences and incomes of consumers). Thus, the monopolist chooses both the price of his product and the volume of his supply.

1. Causes of natural monopoly

There are several possible reasons for the emergence of a monopoly (an industry with a single firm), depending on which monopolies are conditionally divided into natural and artificial.

A natural monopoly is a situation where one large firm in an industry will produce a good at a lower average cost than several smaller firms.

The reason for this situation may be economies of scale (the larger the output of the product, the lower the average cost of its production). A large firm can provide a much lower average cost than a small firm. Consequently, the price of its product may be lower than that of a small firm.

These economies of scale can be explained by the peculiarities of the technological conditions of production.

One of best examples such a natural monopoly is transport. Some of the modes of transport require the existence of certain "lines" (a set of rails, wires, tunnels, or something else) along which cars with passengers or cargo move. For example, metro, trams or trolleybuses. For these industries, the existence of two firms competing for the same customers is highly inefficient. Imagine that in a city two trolleybus fleets compete on the same route! Or three subways with intertwining tunnels serve the same routes at once!

The very possibility of the existence of such an "expensive" company as the subway is explained by the large flow of passengers, each of which pays a low fee, but with a large number of passengers this fee is enough to cover the costs. What will happen if two subways appear and this flow of passengers is divided into two parts? To cover the costs of "their" subway, each passenger will have to pay almost twice as much.

The same can be said about urban utilities (water, sewerage, electricity, telephone, radio, etc.) == economies of scale make it beneficial to have all these systems in a single copy.

But a natural monopoly can be caused not only by technical conditions, but also by a relatively small amount of market demand. Imagine a boatman crossing between two small settlements, which carries a dozen passengers a day, and the money received is barely enough to cover its costs. Why are there two boatmen on this crossing? Or the production of nuclear icebreakers: if you only need to produce 2 or 3 of them a year, how many firms can there be in this industry?

Since the reasons for such a monopoly do not depend on the actions of people, such a monopoly is called natural. But a monopoly can arise only through the efforts of individual actors in the economy.

A firm whose average long-run cost is declining over the entire range of demand due to increasing returns to scale is a natural monopoly. Thus, one firm can satisfy the entire market demand for a good at a lower average cost than would be possible if two or more competing firms supplied exactly the same quantity of the good.

Strictly speaking, the presence of increasing returns to scale along the entire length of the demand line is a sufficient condition, but not a necessary one, for the existence of a natural monopoly. Natural monopoly can also occur with diminishing returns to scale.

The key parameter here is the subadditivity of the cost function. The fact that the cost function has the property of subadditivity shows that the entire volume of production can be produced at a lower cost by a single firm

Multi-product natural monopoly. This type of enterprise is much more common than the natural monopoly with a single product discussed above. If the presence of increasing returns to scale is a sufficient (but not necessary) condition for the existence of a single-product natural monopoly, then for a multi-product firm, increasing returns are neither necessary nor sufficient argument in favor of classifying the firm as a natural monopoly.

The reason lies in the effect of economies on scope. Diversity economies occur when it is cheaper to produce a combination of products in a single facility than it is to produce each of the products in a specialized facility. For passenger and goods transportation, the railway uses the same rails, signaling equipment, services of dispatchers and road management personnel, which allows them to be provided at a lower cost than in the hypothetical situation of the existence of different railways for different types of transportation. When producing multiple products (providing multiple services), economies of variety can outweigh the effect of negative returns to scale, and this will make it economically more profitable for only one firm in the industry to operate. Thus, the existence of a multiproduct natural monopoly is determined by the subadditivity of its cost function, and the presence of increasing returns to scale may not be necessary.

2. Ways to regulate natural monopoly

Natural monopoly - an economic organization or a form of public (state) regulation? Ways to regulate natural monopoly:

Direct state regulation (opportunities and boundaries),

Bidding for a franchise (possibility of use and effectiveness in various conditions),

Price discrimination (organizational and economic aspects)

We can answer the above question only by considering both the ways of regulating the natural monopoly by the state and the forms of economic organization within which it is possible to solve its (natural monopoly) problems.

Start with direct state regulation natural monopoly. Most often, the mechanism and boundaries of such regulation are determined by national legislative acts.

It is believed that direct state regulation through the determination of tariffs or the decisive influence of natural monopolists on them is a fairly simple and understandable way to reduce the role of negative factors that exist in their activities. In particular, in Russian legislation this method given priority attention.

When implementing this approach, several problems immediately arise:

1) the need to create a body state control behind the activities of a natural monopolist or giving such functions to an already existing antimonopoly structure,

2) the difficulty of accurately determining the real costs of a service provider - a natural monopoly.

Let's consider them in order.

The creation of any state body carries the threat of replacing public interests with the interests of the ruling groups, not to mention the corresponding costs for the maintenance of state officials. If we recall that in the largest Russian enterprises - natural monopolies, the state either owns a controlling stake, or is close to it in size, then it becomes obvious that one cannot expect high social efficiency from such a body.

It can be said with a fairly high degree of certainty that the second problem is also not resolved in Ukraine. It is easy to see that it is the enterprises - natural monopolists that increase tariffs on their own products cause inflation of costs in the national economy.

On the other hand, the "wasteful customs" of such enterprises are well known. The ordinary citizen (consumer) ultimately pays for this excessive consumption of enterprises - natural monopolists.

Summing up, we must admit that, despite the obvious simplicity, direct state regulation in our country does not make it possible to regulate natural monopolies in the interests of society. Rather, it happens in the interests of the ruling elites.

Another way to regulate natural monopoly is to use the mechanism of economic organization. This is a bidding for a franchise (the right to conduct such activities).

Above, when considering the regulation of natural monopoly, we came to the conclusion that the solution of this issue is limited, both by the market and by the state, within the framework of the state hierarchy, regardless of the form: either direct activity or direct state regulation.

In the first case - a private unregulated monopoly with the establishment of a monopoly-high price, which has to be paid by society as a whole (we are dealing with direct public harm of the monopoly).

In the second case, all the shortcomings of the administrative, and not the economic system, are manifested, where processes of politicization of the solution of the problem of natural monopoly take place (in the interests of the state and the ruling elites, but not in the interests of society as a whole).

It is easy to conclude that, speaking of bidding for a franchise, we will be dealing with a contract system as a form of economic organization. The contract is concluded with the manufacturer (economic entity) that offers the best conditions (lower price, greater range of services, etc.).

Should we expect that the contract system will solve the problem of natural monopoly once and for all? Of course not. We have already in this work made a fundamental conclusion about the choice in a particular case of any of the three forms of economic organization: the market, the contract system and the hierarchy.

The phenomenon of natural monopoly is no exception, so bidding for a franchise in the regulation of natural monopolies is one of the equally probable options.

O. Williamson's conclusions based on the study of the American experience in the use of bidding for a franchise.

Franchise bidding has made it possible in the United States to solve problems with some natural monopolies, and in a better way than other ways of regulating them. This applies to the deregulation of road freight transport, to the organization of the work of local airlines, postal service, to the work of cable television networks, in some cases - to the work of public utilities, to the problem of deregulation of railways.

Why could this happen?

In each of the cases noted, the winning bidder could be replaced without serious problems in the valuation of assets when transferring them to a new franchisee, since the main production facilities are owned by the state, and other assets can be relatively easily sold (purchased) on the used property market.

It is these provisions that make us pay close attention to bidding for a franchise as a possible form of solving the problems of certain types of natural monopolies in Ukraine, primarily at the local, local level.

For example, the problem of power supply of a certain territory is being solved. There are several generating stations, they produce electricity at different costs. Why not try to solve the problem of minimizing tariffs or the problem of providing additional services for the same price, such as heating, on the basis of bidding for a franchise, provided that it is paid by the local authorities?

Problems will be better solved by using all available opportunities, all forms of economic organization.

Speaking of natural monopolies, one cannot ignore another way of their regulation - price discrimination.

It seems to us that both the natural monopoly has the opportunity to use price discrimination to increase net income, and the regulatory entities to reduce the overall negative effect from the activities of this natural monopoly enterprise.

What is price discrimination? Economic theory gives the following answer to this question - the practice of setting different prices for the same product, provided that the differences in prices are not related to costs.

The prerequisites for the emergence of price discrimination should be sought in the contradictions of the market mechanism. On the one hand, the market is a great averager. Behind the producers, after the production process, he determines the selling price of the goods. On the other hand, each economic entity (in our case, a consumer) is unique (needs, utility estimates, incomes, etc. are different). Thus, at a single market price, there are always buyers who are willing to pay more for a given product than the established market price.

In addition, the isolation of certain markets (institutional, geographical, etc.) cannot be discounted. It also creates the possibility of using different prices in these markets when selling the same product.

Natural monopolies quite often resort to the practice of price discrimination to maximize their net income. To do this, they segment the market. An example of such an approach can be the practice of setting higher tariffs for electricity, gas, communication services, utilities for enterprises and organizations and, accordingly, lower tariffs for citizens.

It is also possible to use multiple tariffs depending on the time of provision of services (communications, electricity, railway and air tickets, etc.).

However, the same mechanism can be used not only by a natural monopoly, but also by society, which seeks to alleviate the burden associated with a monopoly. It can set lower tariffs for socially unprotected groups of the population (pensioners, the disabled, etc.). For example, the widely used practice of feed-in tariffs for different kinds services provided by natural monopolies.

The source of coverage for these benefits is important here. Very often in Russia it is either not determined, or without appropriate calculations, unreasonably, it is shifted to the manufacturer. The most common example is utility bills. The number of “beneficiaries” is already comparable to the number of people who do not have benefits. This contributes neither to the stabilization of the social situation, nor to the normal reproduction of the capital of a natural monopoly enterprise.

The practice of using price discrimination can be applied by society not only in the case of direct state regulation of a natural monopoly, but also in the case of bidding for a franchise.

Thus, price discrimination becomes a “double-edged weapon” that can be successfully used by both the natural monopoly and society to achieve their goals. As a result, a certain “balance of interests” arises and the acuteness of the problem on the part of the natural monopoly is mitigated (smoothed out, removed).

A monopoly in which the minimum efficient output is greater than or equal to aggregate demand, such as in the distribution of electricity. In general terms, monopolies can exist as a result of barriers to entry by competitors, government privileges, or limited information. It is important that legislators understand what type of monopoly they are dealing with, as measures designed to promote competition in markets that are difficult for competitors to enter are likely to lead to increased efficiency, while the same policy for a natural monopoly may well lead to reduced efficiency. It is commonly argued that in the case of natural monopolies, regulation, taxation, or nationalization are the best methods for limiting the abuse of a monopoly position.

The concept of natural monopoly has not only economic, but also political overtones. The state, as it were, postulates the creation of natural monopolies, which must necessarily be in majority state ownership. In addition, such companies usually have numerous social functions. The latter is typical not only for Ukraine, but also (at least until recently) for many developed countries. However, in our country, such a combination of functions creates the basis for the artificial maintenance of the state monopoly even in those sectors where, from an economic point of view, there should not be a monopoly.

In the electric power industry, the natural monopoly part of the sector is the transmission of electricity. It is clear that it is expensive to run wires from ten different suppliers to one apartment, in addition, this entails various external effects in the form of "checked sky". Therefore, in relation to small consumers, the transmission of electricity is a natural monopoly sector, which should be regulated by the state. For larger consumers, this argument is no longer valid: it is quite possible to imagine a situation where one large consumer receives electricity from several different sources through several independent networks. Electricity generation is theoretically not a natural monopoly even for small consumers: if several producers are connected to one monopoly power transmission network, the consumer can enter into a contract with any of them. Of course, access to the services of several providers is important, which may not be the case in remote regions with little demand. For consumers with medium and large demand, there is no monopoly position for energy transmission networks either, since they can create their own gas-fired generating facilities.

All of the above indicates that, despite technological changes, elements of a natural monopoly in the electric power industry remain, which means that state regulation of the sector is also preserved. On the other hand, in those parts of the sector where competition is possible, it can be created in various ways. At the same time, there are two threats: firstly, according to the Russian tradition, excessive regulation can still limit competition or access to the market for new generating capacities, and secondly, attempts to introduce competition where it cannot exist for technological reasons, which can lead to creation of two monopolies instead of one, which is fraught with serious economic problems. There is another very relevant moment for modern Ukraine: the seizure of generating capacities or transmission networks by local authorities or large companies may result in the restriction of consumers' access to electricity for political reasons or in order to limit competition.

findings

So, we have considered the main issues related to the phenomenon of natural monopoly.

We again have a choice, and between the same three forms of economic organization. This is noteworthy, since the speech here was not actually about a firm in the literal sense of the word, but about an industry as an economic unit represented by one firm.

The absence of a single answer to the question posed at the beginning of this part is also important, since it indicates the possibility of practical use of the theory's conclusions. Only a specific analysis of a specific natural monopoly can give an accurate answer to the question: what form of regulation will society use in order to minimize the harm from the monopoly.

A natural monopoly is a state-recognized monopoly on the production and sale of goods and services. It arises where monopoly is naturally conditioned, beneficial to the state and the entire population, or caused by considerations of public safety.

List of used literature

1. Aidarova N.A. State regulation of natural monopolies in the context of the transformation of the Russian economy: Abstract of the thesis. dis. ... cand. economy Sciences / Yuzhno-Ural. state un-t. - Chelyabinsk, 2000. - 28 p.
2. Akopov A.S. Behavior of natural monopolies in the transition period: Abstract of the thesis. dis. ... cand. economy Sciences / Center. economics-math. Institute of RAS. - M., 2000. - 15 p.
3. Androsov K.G. State regulation of natural monopolies: Preprint. - St. Petersburg: SPbGUEF, 2000. - 36 p.
4. Baranov E.F., Solovyov Yu.P., Posvyanskaya L.P. Tariffs for the services of natural monopolies and inflationary processes // Banking. - 2004. - N 8. - S.41-47: tab.
5. Beklaryan L.A., Akopov A.S. Model of behavior of a natural monopoly in a transitional period. - M., 2000. - 74 p. - Bibliography: 25 titles. - (Prepr. CEMI RAS; N WP / 2000 / 098).
6. Beskhmelnitsyn M.I. Economic and financial state of natural monopolies // financial business. - 2003. - N 5. - S.6-13.
7. Vishnever V.Ya. On the issue of state regulation of natural monopoly // Financial capital: movement mechanism: Sat. scientific tr. - M.: Logos, 2000. - S.124-140.
8. Voloshin V.I., Bobovnikov A.I. Regulation of pricing in natural monopolies // Vestn. scientific information. Reforms: yesterday, today, tomorrow / Inst. economy and polit. research - M., 2000. - S.40-62.
9. Gostilovich T.A., Mostovsky I.V. Experience in regulation of natural monopolies in developed economies // Vestn. Tambov. university Ser. Humanite. Sciences. - 2000. - Issue 3 (19). - P.63-77.
10. State regulation of natural monopolies: Experience, problems, prospects: Sat. Art. and mother. / Ed. O.V. Kolomeychenko, V.N. Vorozheykina. - St. Petersburg, 2000. - 254 p.
11. Karibov A.P. Nature and inconsistency of natural monopolies // Vestn. VolSU. Ser.3. Economy. Ecology. - 2002. - Issue 7. - P.46-49.
12. Komarov A.G., Dubov K.S. Peculiarities of state regulation of the activities of natural monopolies // Sovrem. grew up economics (problems and prospects): Sat. scientific tr. Part 8. - St. Petersburg: Publishing house of St. Petersburg State University of Economics, 2000. - С122-129.
13. Milekhin N.N. Regulation of the activities of natural monopolies // Lomonosov Readings. Student work. - M .: Publishing house "University. Humanitarian. Lyceum", 2001. - P. 145-146.
14. Sidorova T.A. Regulation of natural monopolies: foreign experience and domestic realities // Nauch. session of prof.-teacher composition, scientific employees and graduate students based on the results of research in 1999. Faculty. economy and exercise, March-April 2000: Sat. report - SPb.: Publishing House of SPbGUEiF, 2000. - P.162-167
15. Yankov Yu.P. On the issue of improving the system of state regulation of natural monopolies // Vestn. they say scientists of BSUEP (Appendix to "News of BSUEP"). - 2002. - N 1(2). - P.65-67.

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 economic activity. 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 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 by these bodies of their powers, 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 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 sloped down, and not be horizontal, as for competitive organization, since otherwise the monopoly will not be able to change the price by changing the quantity of the product offered.

In the extreme, limiting case, the demand curve for sold by the pure monopolist coincides with the downward-sloping market demand curve for the good sold by the monopolist. Therefore, the monopolist takes into account the reaction of buyers to price changes when he sets the price for his product.

The monopolist can set either the price of his product or the quantity offered for sale at any given price. period time. And since he has chosen a price, the required quantity of the product will be determined by the demand curve. Similarly, if a monopoly company chooses as a set parameter the quantity of a product it supplies to the market, then the price that consumers pay for that quantity of product will determine the demand for that product.

The monopolist, unlike the competitive seller, is not the recipient of the price, and on the contrary, sets the price on the market himself. A monopoly can choose the price that maximizes it and leave it up to buyers to choose how much to buy a given product. The organization decides how many goods to produce based on information about the demand for its product.

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.

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The product of each company trading in the market is an imperfect substitute for the product sold by other firms.

Each seller's product has exceptional qualities and characteristics that cause some buyers to prefer its product to that of a competing firm. product means that the item sold on the market is not standardized. This may be due to actual quality differences between products or to perceived differences that result from differences in advertising, prestige trademark or "image" associated with the possession of this product.

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There are a relatively large number of sellers in the market, each of which satisfies a small but not microscopic share of the market demand for general type product sold by the company and its competitors.

Sellers in the market place no regard for the reactions of their rivals when choosing how to price their wares or when choosing annual sales targets.

This feature is still a consequence of the relatively large number of sellers in the market with monopolistic competition. that is, if an individual seller cuts the price, then it is likely that the increase in sales will occur not at the expense of one organization, but at the expense of many. As a consequence, it is unlikely that any individual competitor will suffer a significant loss in market share due to a decrease in the selling price of any individual company. 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 leads to inefficiency in the distribution of resources "the net loss to society when much less product and at a higher price is produced than consumers could have at this level of development in 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 beneficial features 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.

Monopoly is

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. To late XIX century, the situation has 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.

AT ferrous metallurgy 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 participants. An example is the agreement on the construction of an oil pipeline, which is planned to run from Marseille through Basel and Strasbourg to Karlsruhe. This union involves 19 concerns from various countries, including the Anglo-Dutch Royal Dutch Shell, the British British Petroleum, the American Esso, Mobile Oil, Caltex, the French Petrofina and four West German concern.

The capitalist industrialization of the world played a big role in the development of the economy of the Russian Federation. Served as an impetus for the development of their own industrial enterprises.

The benefits and harms of monopolies

In general, it is difficult to talk about any public benefit brought by monopolists. However, it is impossible to completely do without monopolists - natural monopolists are practically irreplaceable, because the peculiarities of the factors of production used by them do not allow the presence of more than one owner, or the limited resources lead to the unification of the enterprises of their owners. But even in this case, the lack of competition stifles development over a long period of time. Although both competitive and monopolistic markets have disadvantages, competitive market achieves better results in the development of the relevant industry in the long term.

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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 ensures that collusion, concerted action by enterprises to limit production and raise prices is almost impossible.

Monopolists limit output and set higher prices due to their monopoly position in the market, which causes misallocation of resources and increases income inequality. Monopoly lowers the standard of living of the population. Monopoly firms do not always use their full potential to ensure ( scientific and technological progress). The monopolist does not have sufficient incentives to improve efficiency through scientific and technical progress because there is no competition.

Monopoly is

Monopoly leads to inefficiency when, instead of producing at the lowest possible level of marginal cost, the lack of incentives causes the monopoly to perform worse than a competitive organization could.

MONOPOLY - (Greek: this, see the previous next). The exclusive right of the state to manufacture or sell any items, or grant them the exclusive right to trade to anyone; the seizure of trade in one hand, as opposed to free ... ... Dictionary of foreign words of the Russian language

MONOPOLY- (monopoly) A market structure in which there is only one seller in the market. We can talk about a natural monopoly if the exclusive position of the monopolist is the result of either the exclusive right to own some ... ... Economic dictionary

Monopoly- (monopoly) A market where there is only one seller (manufacturer). In the case when there is a single seller and a single buyer, the situation is called a bilateral monopoly (bilateral monopoly) (see also: ... ... Glossary of business terms MONOPOLY - MONOPOLY, monopoly, wives. (from Greek monos one and poleo I sell). The exclusive right to produce or sell something (legal, economic). The monopoly of foreign trade is one of the unshakable foundations of the policy of the Soviet government. Insurance… … Dictionary Ushakov

Monopoly- a variant of imperfect competition, in which there is one large seller on the market of goods (services), due to his position, he is able to influence prices. Other sellers are much smaller and unable to influence the market. Private… … Banking Encyclopedia

MONOPOLY- (from mono ... and Greek poleo I sell), 1) the exclusive right of production, trade, fishing, etc., belonging to one person, a certain group of persons or the state; in a broad sense, the exclusive right to something. 2) Monopoly in the field ... ... Modern Encyclopedia

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A natural monopoly arises from 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 activity of subjects of natural monopolies is more efficient in the absence of competition, which is associated with significant savings on the scale of production and high semi-fixed costs. Such areas include, for example, transport. The cost of delivering cargo or transporting one passenger is 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 offer, rising car prices will cause many consumers to refuse to purchase 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 organization of the market, that is, the presence complete system networks extended in space through which a certain service is provided, including the presence of an organized network, which requires management and control from a single center in real time.

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.

What is a monopoly? What can she be? What are the differences between its different types?

general information

So, first, let's define what a monopoly is. This is the name of the position in the economic process or the situation with the presence of a single seller, as a result of which there is no competitiveness (competition) between different suppliers of services and goods.

It should be noted that there are quite a few of its types, depending on the circumstances. The ideal position for a monopolist is a situation in which there are no substitute goods (substitutes). Although in practice they always exist, the only question is how effective they are and whether they can help meet the existing need.

What are the types of monopolies?

Economic science distinguishes the following types:

1. closed monopoly. Provides for limited access to information, resources, licenses, technologies, and other important aspects. Sooner or later it will be discovered.
2. Her definition is as follows - this is a provision that provides for the existence of competitiveness and competition, as a result of which they reach their minimum in cases where the company serves the entire market. But at the same time, it exists only where, due to various circumstances, it is beneficial to create something only within the framework of one company, and not several.
3. open monopoly. The state of affairs when a company becomes the sole provider of a service or product, and this is not affected by any special restrictions in terms of competition. An example is a breakthrough in a certain area through the creation of a new unique product. You can also use position with brands.
4. Monopoly Arises when different prices are set for different units of the same product. It appears when the buyer is divided into groups.
5. resource monopoly. Provides a restriction on the use of a particular good. The definition of "resource monopoly" can be more easily understood using a small example: there is a need for a forest. But it will not be possible to get wood faster than forestry enterprises grow it. In addition, there is a certain restriction on the territory.
6. In this situation, there is only one seller, and there are no close substitutes in other industries. The definition of pure monopoly involves the existence of a unique product.

Conventionally, all types can be divided into three main classes: natural, economic and administrative. We will now consider them.

natural monopoly

It arises due to the influence of objective causes. It is usually based on specific features of customer service or production technology.

What is a natural monopoly? The definition of this situation would be incomplete without examples. You can meet her in the field of energy supply, communications, telephone services, and so on. There are a small number of companies in these industries (and sometimes there is only one state-owned enterprise). And thanks to this, they occupy a monopoly position in the country's market. For example, space exploration. Fifty years ago, only states could do this for a number of reasons. But now there is already one private company that offers its services.

Administrative (state) monopoly

It appears as a result of the influence of authorities. So, it can be expressed in the fact that individual companies are granted the exclusive right to carry out a specific type of activity. As an example, one can also organizational structures state enterprises, which are united and subordinate to various associations, ministries or central administrations.

This approach is used, as a rule, to unite within the same industry. In the market, they act as one economic entity, which implies the absence of competition. An example is the former Soviet Union. That's what the definition does not provide for the existence of such a provision throughout the country.

Take, for example, the military industry. It is necessary to make sure that she is ready for all sorts of troubles and surprises. And if it is transferred to private hands, then the greatest harm can be done to the military industry. And this should not be allowed under any circumstances. Therefore, it is under the control of the state.

economic monopoly

This is the most common class. If we consider what this monopoly is, definition by history, trends in the development of society, then the following feature should be noted: compliance with the laws of the economic sector. The central object in this case is the entrepreneur. It can obtain a monopoly position in two ways:

1. Successfully develop the enterprise, constantly increasing its scale through the concentration of capital.
2. To unite with other people on a voluntary basis (or by absorbing bankrupts).

Over time, such a scale is reached that we can talk about dominance in the market.

How does a monopoly arise?

Modern economic science identifies three main ways of this process:

1. Conquest of the market by a separate enterprise.
2. Conclusion of an agreement.
3. Use of product differentiation.

The first path is very difficult. This is confirmed by the fact of the exclusivity of such formations. But at the same time, it is also considered the most decent due to the fact that the conquest of the market occurs on the basis of efficient operation and gaining a competitive advantage over other enterprises.

More common is an agreement between several large firms. Through it, a situation is created in which manufacturers (or sellers) act as a “united front”. In this case, the competition is reduced to nothing. And first of all, the price aspect of interaction is under the gun.

The logical result of all this is that the buyer finds himself in uncontested conditions. It is believed that for the first time such situations began to arise towards the end of the 19th century. Although in fairness it should be noted that such monopolistic tendencies began to manifest themselves in ancient times. But the latest history of this phenomenon dates back to the economic crisis of 1893.

Negative influence

Monopoly is often perceived in a negative way. Why is that? This largely explains the correlation between crises and monopolies. How does everything happen? There are two options here:

1. The monopoly was established during the crisis by a few businesses to stay afloat. In this case, it is easier for them to survive difficult times.
2. The monopoly enterprise created the conditions for a crisis in order to force small players out of the market and take their market share for itself.

In both, they are large structures, which account for a significant amount of production. Due to their dominant position in the market, they can influence the pricing process, achieving favorable prices for themselves and making significant profits.

It should be noted that the monopoly position is the desire and dream of every enterprise and company. This allows you to get rid of a large number risks and challenges posed by competition. In addition, in this case they occupy a privileged position in the market and concentrate economic power in their hands. And this already opens the way for imposing their conditions on contractors and even society.

The specifics of monopolies

Attention should also be paid to certain specifics in economics, which studies this influence. It should be noted that this is not mathematics, and here many terms may have a different interpretation, and some may not be recognized in individual textbooks / collectives.

Consider an example. At the beginning of the article, the definition of pure monopoly was mentioned, but this does not mean at all that everything is exactly so. It is possible to find information about the availability additional aspects or a slightly different interpretation of the term. This does not mean that one of them is wrong. There is simply no concept approved at the state / international level. And as a result, there are different interpretations.

The same could be said if we considered an artificial monopoly. The definition of this term could be given as follows: a situation where such conditions are created for an individual enterprise that it affects the entire market. It's right? Undoubtedly! But if we say that an artificial monopoly is the concentration of resources, production and sales in the same hands through a cartel or trust, then this is also true!

Conclusion

This is the definition of the word "monopoly". It should be noted that this is a very broad and interesting topic. But the size of the article is limited. We could also talk about the practical features of monopolies in various parts of the world, consider the situation in the countries of the former USSR, find out what and how in Western Europe and the USA. There is a great deal of material on this topic. As the saying goes, whoever seeks will find.