Monopolization of markets is what? The concept, the main forms, the consequences of monopolization
Modern man can hardly be surprisedthe presence of several hundred varieties of cheese and lemonade, a huge number of brands of clothing and equipment. On the contrary, he is often confused by the existence of only one manufacturer in the industry. Monopolization of markets is the situation when only one enterprise or person acts as a supplier of a certain type of goods or services. In this case, the consumer has no choice, he is forced to agree to a fixed price. Monopolization of markets is also a process in which the company gets the opportunity to raise prices and eliminate its competitors. And such enterprises are not necessarily large, it all depends on the size of the industry in which they operate.
The concept of
Economists distinguish four types of ideal market structures:
- Perfect competition. In this situation, there is a huge number of substitute goods, and entry to the market is practically unlimited. Everything is decided by the "invisible hand".
- Monopolistic competition.In the industry, many manufacturers operate, which produce substitute products. However, companies retain some control over pricing. This determines the levels of monopolization of the market.
- Oligopoly. In this situation, there are several enterprises that produce similar products. They can develop a common strategy by setting prices in the industry.
- Monopoly. This market structure provides for the presence of only one supplier of products, which has full control over the industry.
Characteristics of the monopoly
A common opinion is that the perfectcompetition is almost a panacea, a compromise between the desires of the seller and the consumer. Most economic models accept this structure as a basis. But why, in this case, do markets monopolize? This is due to the fact that this state of things is extremely beneficial to the manufacturer. First, the monopoly allows you to maximize profits. Secondly, the producer sets the price for his products through the definition of output. Thirdly, in the conditions of monopoly there are big barriers to entry into the industry. The only manufacturer can not be afraid of a rapid increase in competition.
When there is monopolization of the market, competition in the formed structure is the basic sign for determining its type. There are three forms of monopoly:
- Natural.It arises from reasons of an objective nature. This means that the demand for this product is best satisfied by one firm. The reason may be the features of the production process or customer service. For example, such branches include energy supply, water supply, rail transportation.
- Administrative.This form of monopoly is created with the participation of the state. It, in the person of its bodies, grants to a certain firm the exclusive right to carry out activities in the industry. The economy of the USSR was extremely monopolized. Most enterprises were under the control of departments and ministries.
- Economic monopoly is the mostcommon form. Its appearance is connected with the own initiative of enterprises. Monopoly position in the market can lead to both progressive development and rapid centralization of capital through acquisitions and voluntary associations.
Conditions for the monopolization of the market
The structures under consideration can both be createdthrough a series of acquisitions by some companies of others, and naturally formed in certain industries. Can create them and the state. Monopolization of markets is a process in the center of which there are three main reasons:
- The production of goods by one firm is cheaper than several. In this case, we can talk about a natural monopoly.
- One enterprise is the ownerextremely rare resources or technologies. For example, the company Xerox at one time completely controlled the process of making copies. Knowledge of this process was protected by patents. This is an economic monopoly.
- Provision of certainan enterprise of the exclusive right to sell a certain good. In this case, there is a so-called administrative monopoly. In some states, only this form is permitted by law.
Sources of monopoly power
In conditions of perfect competition, the price isThe average value of the marginal costs of firms operating in the industry. It has a higher monopoly. Therefore, this market structure seems to be undesirable for consumers. The main assistant to the monopolies are barriers to entry into the industry. They prevent the emergence of competition. Among them:
- Economic barriers.
- Legislative limitations.
- Deliberate actions.
The first group includes at mostrestrictive measures. This includes economies of scale. The size of monopolies allows them to significantly reduce costs, ordinary firms simply can not compete with them in the price of products. Therefore, their activities can not be effective, since the cost of their goods is much greater.
Another economic constraint iscapital requirements. If you need expensive equipment to start production, this will also prevent the emergence of competitors. Monopoly may have a technological advantage or act as the owner of natural resources necessary for the release of goods.
With regard to legislative restrictions,this group includes intellectual property rights, including patents. They give the monopoly the exclusive right to produce goods or the technology of its release.
The third group of restrictions includes a variety ofdeliberate actions taken by a monopoly to prevent competition in the industry. For example, it can lobby its interests in the government through various corruption practices.
This form of the market structure described is oftenconsidered separately. This is due to the debate about its usefulness, not only for the monopolist himself, but also for consumers. It occurs when there is a large value of economies of scale effect. A natural monopoly is a situation where a single firm provides the market with products with lower costs than would be done by several enterprises. A vivid example is water and electricity. However, this does not mean that natural monopolies are completely harmless. Therefore, they need to be monitored by the state.
In international business
The global economy is increasingly affectedglobalization and internationalization. These two processes are responsible for the monopolization of the services and services market at the international level. There are two types of such structures:
Monopolization of the Russian market hashistorical roots. In the USSR, the state almost completely controlled the economy. With the reduction in production in Russia, the demand for products of natural monopoly industries, except for communications, is gradually decreasing. This led to a rapid rise in prices in them. Given that these industries are fundamental, this provoked inflation. Some economists see the negative consequences of monopolization of the market as the main factor of crises in Russia.