Pure monopoly, its characteristic features. Reasons for the formation and forms of monopolies. Monopoly Reasons for the formation of a monopoly
Reasons for the formation of monopolies:
1) Patent.
In most countries around the world, inventions are protected by patent system. A patent usually represents the exclusive right to own the technology for producing a particular product.
2) Ownership of resources.
The firm controls most of the resources, and, accordingly, controls most of the market (for example, ownership of a unique deposit of valuable natural material).
3) State licenses.
In many markets, the state does not allow all firms to engage in a certain type of activity, except those that have state licenses to do so.
For example, the administration of some airports, by selling retail space in their halls to traders, actually forces them to charge the highest prices. And your dissatisfaction with the price of 100 rubles for a hot dog in the airport building should be addressed to the airport administration rather than to the sellers.
The behavior of monopolistic associations in the market differs from what we know about free competition; monopolists have a fundamentally different approach to pricing. Monopolists conquer the market in order to collect a kind of tribute from economic entities dependent on them using the prices they set. In this way they receive much higher incomes compared to their average level established in the national economy.
As is known, participants in free competition perceive the market price as formed independently of their participation. But monopolistic firms themselves and at their own discretion set the market price for the products they produce. In conditions of free competition, when determining the equilibrium price, the interaction of supply and demand (respectively, the demand curve and the supply curve) is taken into account. However, monopolistic associations do not take into account the objectively necessary volume of production of goods. Therefore, when determining the dynamics of prices for monopoly products, there is no supply curve at all.
These organizations manipulate (manage) the law of demand: they arbitrarily influence the price and volume of demand in their own interests.
Firms that dominate the market use monopoly price as their main tool of manipulation.
Monopoly price - a special type market price, which is set at a level above or below the social value or equilibrium price in order to obtain monopoly income.
Firms set monopoly high prices for their products, exceeding the social cost or the possible equilibrium price.
Monopolistic behavior increases due to:
- · accelerating the concentration and centralization of capital, mergers and acquisitions of companies;
- · strengthening product differentiation;
- · uniqueness of the product or service produced;
- acceleration scientific and technological progress, increasing costs for research and development work in knowledge-intensive industries;
- · complications sectoral structure production, a sharp increase in the role of infrastructure;
- · opening of markets individual countries international capital, expanding the role of transnational corporations;
- · market growth rate;
- · active state support and assistance to individual market participants.
The emergence of monopolistic enterprises is due to the progress of productive forces and the realization of the advantages of a large enterprise over a small one. I believe that sometimes the emergence of a monopoly is inevitable, although the government imposes anti-monopoly policies. For example, it is difficult to avoid the emergence of a monopoly on the production of those products that are fundamentally new and previously unknown to society, those products that are manufactured with the latest technology, as a result of scientific and technological progress. But the burden of this monopoly is not long-term. Sooner or later, innovations become commonplace in society, which is quite natural for the emergence of competing firms.
In Russia, monopoly arose as a result of the command-administrative system. Back in the USSR, the market was completely monopolized, since the state controlled all industries, as well as service sectors. The consequences became obvious already in the 70s, when the time of “stagnation” came. Based on these facts, we can conclude that an effective monopoly cannot exist for the long term. A monopolist will always try to reduce costs, so constant innovation is unlikely, and the lack of competition does not stimulate the development of scientific and technological progress.
Basic concepts in the field of monopoly
On modern stage economic development, a monopoly can play both a positive and negative role for the state.
Today, Russia has laws of a competitive market, but most companies strive to pool their resources in order to dominate the market for goods and services, which leads to monopolization processes.
Note 1
Monopolization is a whole process of conquering a market with the aim of occupying a dominant position in it.
Monopoly is the specific form and essence of monopolization.
Definition 1
A monopoly is the right of someone (an enterprise, a state) to own something and, within the framework of this, the right to carry out and implement its activities.
Five reasons why monopoly occurs
Why does a monopoly arise? competitive market, this question is relevant for most people in our country. Even in ordinary life, each of us in one way or another encounters monopolists, for example, suppliers of electricity, gas, water supply, etc.
There are five reasons why a monopoly occurs in a market:
- The law itself is about competition in the market. No matter how strange it may sound, it is competition that gives rise to monopoly. Since the main goal of an enterprise in the market is to make a profit, every owner wants to receive as much profit as possible. Based on these desires, the company begins to look for opportunities to increase capital and production capacity. This is how global mergers of companies begin, thereby increasing market share, the company becomes more powerful and influential, with such opportunities the enterprise can even absorb other smaller competitors, simply buying up their business or “squeezing” them out of the market. A monopoly in a competitive market provides many advantages: uncontrolled price regulation, high and stable sales levels, excess profits, etc.
- Law on concentration of capital and production. The legislation of our country has a law that states that each manufacturer must spend part of its Money on business development, in particular on expanding the boundaries of production, which, one way or another, leads to the fact that the scale of production increases and improves. This, in turn, leads to monopolistic processes.
- New formations of global production. Independent and legal mergers of companies form new monopolistic structures. Russian legislation does not prohibit the voluntary merger of companies, moreover, the creation joint stock companies- This is a legal activity that is supported by the state. Several companies on the market with a similar product unite and create one large enterprise, this process is called centralization in economics. Centralization, together with the concentration of capital, is a good guarantee of a monopoly.
- Processes of change private property. Small enterprises are certainly needed in the market and play an important role in the country’s economy. But without the formation of large enterprises there would be no serious breakthrough in the scientific and technical sphere. Thus, over the past few decades, transport links, the infrastructure of many cities, and the Internet have been built, all thanks to the development of large corporations in the market that are able to invest money in scientific and technological progress.
- Influence crisis situation To the market. Economic crises in the country are pushing enterprises to merge. In a crisis situation, it is quite difficult for small and even medium-sized companies to survive; they either have to leave the market or be on the same team with competitors and build a common empire using joint capital. Crises push enterprises towards the emergence of monopolistic structures.
A market situation when the seller of goods and services does not experience competition forcing them to reduce prices and improve the quality of goods.
There is one in the industry big player, and entry to other participants is closed due to administrative or economic barriers.
Reasons for the formation of a monopoly
The process of market monopolization occurs for the following reasons:- The presence of administrative barriers that complicate entry into the industry (licensing, certification, etc.).
- Features of the policy of the state, which, in order to support the domestic manufacturer, creates obstacles to the development of its foreign competitors (for example, sets high import duties).
- The process of merging small firms and forming one or more large players from them.
Types of monopoly
Depending on the reasons that caused the formation of monopolies and the characteristics of their functioning, they are divided into the following types:- Closed - a situation in the market when the dominance of one company is due to legislative restrictions, administrative barriers to entry into the industry (for example, the production of military equipment, the printing of banknotes, the production of narcotic painkillers).
- Open - market structures in which the special position of the company is determined by its achievements, for example, the development of a new product, modern technology. Such monopolies are temporary but provide the dominant companies with maximum profits.
- Natural are situations where all demand is satisfied by one company. The costs of entering the market are too high, profitability is low, so other players cannot enter the industry (housing and communal services, energy).
- Artificial - market structures in which dominant organizations are formed by merging small players into holdings, trusts, and syndicates. Large manufacturers use unfair methods of competition to help get rid of rivals (price dumping, speculation, industrial espionage).
Pros and cons of a market monopoly
The process of market monopolization implies the following positive consequences for the economy and society as a whole:- The ability to make maximum use of economies of scale, i.e. reduce the cost of a product unit due to large production volumes.
- Technology development: monopoly firms receive high profits, which allows them to invest in the development of scientific research and development.
- Market differentiation: monopolists often offer products for different social groups at different prices (for example, discounts on train tickets for students and pensioners, discounts on housing and communal services for senior citizens, etc.).
Monopoly is a form of market (market structure) in which one or more firms are suppliers of a product that does not have close substitutes, and as such occupy a dominant position in the market, which allows them to determine prices or significantly influence them.
Being the opposite of competition, monopoly means the exclusive right to production, fishing, trade and other types economic activity belonging to one person, group of persons or state. Has long been known natural monopoly . An industry in which a single firm operates more efficiently than competitors. There are many examples of natural monopoly: local provision of electricity and gas. In such an industry, the minimum efficient scale of production of a good is close to the quantity for which the market demands at any price sufficient to cover production costs.
In all other cases, monopolies are artificial, i.e. there are subjective reasons for their formation. For modern economic life became characteristic precisely artificial monopoly .
Natural, or pure, monopoly? a market model in which one firm is the only producer of a product that has no substitutes. Known for her character traits:
1. A single seller, i.e., an industry, consists of one firm. Are there “company” and “industry” here? synonyms. One company is the only manufacturer of this product or the sole service provider.
2. There are no substitutes for this product. Product monopolies unique in the sense that there are no good or close substitutes. From the buyer's point of view, this means that there are no acceptable alternatives. The buyer must purchase the product from monopolist or do without it. To such monopolies include state-regulated public utilities or so-called natural monopolies(electric and gas companies, cable television, water supply and communications companies, etc.). There are also no substitutes for the services provided by public utilities. But if they exist, they are either expensive or inconvenient.
Clean monopoly may also have a geographical dimension.
A small city is sometimes served by only one airline or railroad. A local bank, movie theater, or bookstore may be considered clean monopolies in a small town.
3. The company dictates the price. An individual firm operating under conditions of pure competition has no influence on the price of a product: it “agrees with the price.” Clean monopolist exercises significant control over price. And the reason is obvious: it issues and therefore controls the total supply.
4. Entry into the industry is blocked in the form of: a) economies of scale; b) lack of substitutes; c) ownership of patents and Scientific research. These barriers help explain the existence of pure monopolies and other non-competitive market structures. Barriers to entry into the industry, which are very significant in the short term, turn out to be surmountable in the long term.
Thus, natural monopoly (monopoly in the narrow sense)? This monopoly on rare and irreproducible factors of production (land, gas, oil, rare metals, etc.
). Natural monopolist produces a unique product? there is no substitute for it. For example, gas heating at home. No gas? and there is no heat. And it turns out: being the only gas producer, monopolist occupies a dominant position in the market. Will he commit arbitrariness? “increase” prices to incredible levels or change the gas supply regime at your discretion? Maybe he would like it that way, but it is not so. And all because the majority natural monopolists are created by the government. The government can issue a patent for a unique product, a copyright for something, or a license to do business in a certain market without competition. In addition, municipalities license power plant companies, gas companies, and communications companies to prevent duplication of capacity. These companies are very strictly controlled in their activities and pricing
The reasons for the emergence and development of monopolies are associated with the action of objective economic laws, the development of productive forces and significant changes in the technological method of production.
Firstly, operation of the law of competition. The law of competition and each of its functions are subordinated to achieving the main goal of production - profit maximization. To maximize profits, the manufacturer must constantly increase production and sales of goods, gradually eliminating its competitors. In the end, the manufacturer, capturing and controlling most of the production and sale of goods, turns into a monopolist. This means that competition gives rise to its antipode - monopoly. Competition and monopoly always exist in reality market economy as two opposite and interdependent characteristics of it.
Secondly, the reason for the emergence of a monopoly is the action law of concentration of capital and production.
Concentration of capital is the process of increasing the size of individual capital through the capitalization of profits, i.e., using a certain part of it to expand production.
Thirdly, the reason creating a monopoly is process of centralization of capital.
Centralization of capital - this is an increase in the size of capital due to the absorption or combination of several, previously independent, individual capitals into one larger one.
Fourthly, the reason for the emergence of monopolies was the transformation of individual private property.
Fifth, economic crises are second half of the 19th century V. became a factor in accelerating the concentration and centralization of production and the creation of monopolies on this basis.
Consequence economic crises is the massive ruin and bankruptcy of small and medium-sized enterprises. Some of them are forcibly absorbed by big capital, while others are forced to agree to unification in order to avoid ruin. The relationship between these two phenomena - crises and monopolies - shows one of the reasons for the accelerated monopolization of the economy.
Natural monopoly arise as a result of objective reasons.
First, it may appear when the entire volume of a particular product or service is the product of one or more firms. Competition in this case is neither possible nor desirable (say, in energy supply, metro).
Secondly, this form of monopoly arises in agriculture and extractive industries.
Administrative monopoly arise as a result of action government agencies, which grant individual firms exclusive rights to perform a certain type of activity.
Economic monopoly which is the most common, grows based on patterns economic development. The first path that leads to it is through the concentration of production, and the second is based on the centralization of capital.
Scientific works and textbooks define such basic forms of monopolies as cartels, syndicates, trusts and concerns.
Cartel - this is an association of several enterprises of the same industry, which does not eliminate their production or commercial independence, but provides for an agreement between them on certain issues: the distribution of sales markets, price levels, production quotas, and the like.
Syndicate - an association of enterprises from the same industry that create a common herd sales office. Thus, while retaining production independence, syndicate members lose commercial independence.
1) cartel
2) trust
3) syndicate
4) workshop
2. main world currency at the beginning of the 20th century:
1 dollar
2) ruble
3) franc
4) pound sterling
3.The formation of a single world economy at the beginning of the 20th century was associated with:
1) Increase in capital export
2) Great geographical discoveries
3) creation of a single international currency
4) leveling economic development countries
4. At the end of the 19th century, the German economy developed rapidly as a result of:
1) reduction in military spending
2) abandonment of the policy of protectionism
3) annexation of Alsace and Lorraine
4) tightening labor laws
Reasons for rapid economic development in the United States after the Civil War:
a) the United States had vast territory and natural resources;
b) The country has developed a single internal market;
c) The political life of the United States was influenced by the two-party system;
d) No threat to the country's security;
e) The “fluidity” of the labor force—the departure of workers to “free” lands—forced entrepreneurs to use advanced technology;
f) High level of development of science;
g) The hard work ethic characteristic of Americans;
i) A fairly high level of general technical education;
j) rapid stratification of farming at the end of the 19th century.
1) the officially recognized nuclear powers are the USA, Russia, Great Britain, France and China;
2) The Soviet Union collapsed in 1989;
3) the “bipolar world” (USSR-USA) ceased to exist with the end of the Cold War;
4) The United States has repeatedly carried out military operations in countries affected by conflicts without UN authorization;
5) Russia is not one of the G8 countries;
6) the anti-globalization movement supports the idea of international economic integration
The USA in the 19th century is defined by the concept A) the industrial revolution b) the American way of development of capitalism C) the Prussian way of development of capitalism D) the urban population grew rapidly2. At the end of the 19th century - the beginning of the 20th century, independent medium and small enterprises ceased to exist, they were supplanted by large monopolies A) true b) false3. Please indicate the most developed country Europe in industrial terms at the beginning of the 20th century. A) France B) Prussia C) England D) Austria4. Write down the names of inventors and industrialists associated with the automotive industry. Siemens, R. Fulton, O. Evans, K. Benz, E. Marten, R. Trevithick, F. Lesseps, G. Daimler, O. Lilienthal, G. Ford5. Note the features of conservative ideologyA) revolutionary transformations are better than liberal reformsB) respect for political traditionsC) the desire to eliminate all political freedomsD) recognition of the need for some reforms to prevent major upheavalsD) reforms should not violate traditional foundations6. Note the main features of liberal ideologyA) the need to conduct political struggle through creation of secret societiesB) unconditional recognition of the principle of separation of powersC) recognition of the best form of government as an unlimited monarchyD) protection of political freedoms of citizensD) unconditional recognition of the inviolability of private property7. The system of measures introduced by Napoleon prohibited all countries dependent on France from trading with England and was called A) a trade war B) a continental blockade c) “the closure of England”8. Napoleon considered this document his “true glory”: A) Constitution B) Declaration of Independence C) “Civil Code”9. What is the essence of the parliamentary reform of 1832 in EnglandA) the introduction of secret voting in parliament B) the reduction of property qualifications in elections C) the increase in deputy seats from large industrial areas D) the introduction of payment for work in parliament10 What were the demands of the Chartists? A) the annual election of members of parliament B) establishing a minimum wages C) abolition of property qualifications in elections D) payment for the work of members of parliament E) proclamation of a republic11. Indicate which country did not participate in the Holy AllianceA) Russia B) Austria C) England D) Prussia E) France12. Urbanization is A) A doctrine that revises some provisions of Marxist teachingB) A form of monopoly, the participants of which jointly sell products C) The growth of cities and urban populations13. Most of the paintings by this artist are in Spain A) F. Goya B) T. Gericault C) E. Delacroix D) Jacques Louis David14. The stories and tales of this writer laid the foundation for detective literatureA) James Fenimore Cooper B) Thomas Mayne Reid C) Edgar Allan Poe
2. Align