Monopoly is a state of the economy in which a certain business niche is dominated by a single entity that determines prices and quantity of the product. The model is considered the least effective for the consumer, since the lack of competition causes stagnation and shortages.

Monopoly is a natural or artificial state of the market in which the means of production for one or more goods (services) are entirely in the possession of one player. A state, a private company, or an international organization can act as a monopolist. The exclusive right to extract a resource and process it, supply goods or provide services can lead to both the protection of consumer rights and their violations.

In economics, the Herfindahl Index is used to assess the real state of affairs in the country and the world. This indicator demonstrates the degree of concentration of a particular market in the hands of its specific players: the conditional value of HHI is calculated as the squared sum of the percentage of revenue from the total “pie” of each participant.

Pure monopoly, 1 participant: HHI = 100 2 =10000

2 players: HHI = 50 2 + 50 2 = 5000

10 players: HHI = 10 2 x 10 = 1000

The emergence and development of monopolism

Monopoly - what is it, what is the danger of the phenomenon? The desire to capture the market and extract maximum profit is natural for business. The first formations of this type arose in ancient times, when the rulers of cities and lands concentrated the production of certain goods in their hands. In Tsarist Russia, the right to produce alcoholic beverages belonged exclusively to the state (read: its leader). And China had an exclusive technology for creating silks and porcelain - no one could offer analogues.

At the moment, nothing has changed significantly: monopolies are either created artificially or formed naturally. At the same time, excessive concentration of markets in the hands of one participant is recognized as unfair competition. In reality, influencing the state of the economy is not easy, since changes require significant funds.

Types of monopolies:

1. Natural. A product is produced or a service is provided that has no analogues, and the development of an alternative requires too large a one-time investment. This, for example, has been the case for rail and air transportation for a long time: communication routes, concentrated in the hands of one owner, exclude competition.
2. Artificial. Measures to limit the number of participants are taken at the state level in order to ensure the quality standard of the product (service) and (or) consumer safety. This applies to gas transportation, nuclear waste storage, etc. The register of such monopolists is presented on the website of the FTS of Russia.
3. Open. After the invention of a new technology and the launch of its commercial use, the owner of the secret temporarily becomes an exclusive participant in the relationship with the consumer. For example, if the teleport principle is revealed in the near future, transport companies providing this service will be temporarily deprived of competitors.

Oligopoly

Oligopoly is a market condition in which a limited number of participants have the right to extract a resource, process it, produce a product or provide a service. A classic example is the production of passenger aircraft and spaceships, where competition is between two or three companies.

Advantages of monopolies:

1. Carrying out a unified policy. For example, in Saudi Arabia, the concentration of the oil and gas complex in the hands of the state makes it possible to influence world oil prices, solving external problems.
2. Ensuring high profits. Administrative price regulation allows the manufacturer to quickly recoup its costs and receive the greatest revenue.
3. Consumer protection. In some cases, government regulation of production provides security for the least affluent sections of society.

Criticism of monopoly

Monopoly: what is it in simple words? This is the desire of a group of people to completely take over the distribution channel, to “sit on the pipe.” At all times, opponents of excessive market concentration have expressed arguments in favor of developing competition. The more companies fight for their share of the business pie, the better it is for the consumer.

15 years ago, when cell phones were produced exclusively by high-tech giants, only the wealthiest consumers could afford them. Over the years, offers from hundreds of small companies have slowly but surely brought down the price of devices, while the level of gadgets has skyrocketed.

Monopolization of industries ensures a decrease in technical progress - the manufacturer has nothing to strive for. This could be fully felt by the residents of the USSR, where there were only a few large automobile plants, and the queues for cars were scheduled for years in advance. As a result, Avtovaz produced the same vehicle models for decades, and global progress moved forward, leaving the entire industry behind.

This exposes another unpleasant part of the process - a severe shortage of goods and services. It can arise artificially or accidentally (due to poor calculation) in a way. In the absence of competition, the manufacturer himself decides how much goods to “throw away” for sale. And an oversaturation of demand will mean a decrease in profits for such a giant.

Monopolization of markets in Russia

The list of sectors of the economy in which the concentration of a large share of profit in the hands of one participant is allowed is listed in Federal Law No. 147 of 08/17/1995 - “On Natural...”. In these areas, strict government regulation is carried out through the establishment of maximum prices. The lack of competition has a negative impact on industries: this can be seen in the example of the Russian Railways corporation.

All other manifestations of monopolism are persecuted by government agencies and are not acceptable. Antimonopoly authorities monitor the degree of market concentration in the hands of one player or another, and collusion between large producers of goods or service providers.

Over the 6 months of 2016, the antimonopoly services of the Voronezh region alone held violators accountable for 12 violations of the law (we are talking about using the dominant position of housing and communal services, energy companies), the total amount of fines amounted to 180 million rubles.

The main monopoly industries in the Russian Federation:

1. Central water supply and sanitation (JSC Mosvodokanal, State Unitary Enterprise Vodokanal of St. Petersburg);
2. Fuel and energy complex (OJSC Gazprom, OJSC Mosgaz and others);
3. Railway transportation (JSC Russian Railways);
4. Airport services (JSC Vnukovo Airport, JSC MASH);
5. Ports, terminals, inland waterways;
6. Public postal and telecommunications (for example, FSUE Russian Post, OJSC Moscow City Telephone Network);
7. Disposal of radioactive waste (Federal State Unitary Enterprise “National Operator for Radioactive Waste Management”).

Monopoly game

A well-known fun for children and adults will help you experience all the delights of such an economic model. A tactical game where participants “buy businesses,” upgrade them, and charge a fee for passage through their territory clearly demonstrates the danger of market monopolization. The most intelligent, prudent and successful businessman in the end remains in splendid isolation, having crushed the entire game board under himself.

A modern person can hardly be surprised by the presence of several hundred varieties of cheese and lemonade, or 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 a situation when only one enterprise or person acts as a supplier of a certain service. In this case, the consumer has no choice, he is forced to agree to the set price. Monopolizing markets is also a process in which a company gains the ability 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.

Concept

Economists identify four types of ideal market structures:

• Perfect competition. In this situation, there is a huge number of substitute goods, and entry into the market is practically unlimited. Everything is decided by the “invisible hand”.
• Monopolistic competition. There are many manufacturers operating in the industry that produce substitute products. However, companies retain some control over pricing. This is determined by the levels of market monopolization.
• Oligopoly. In this situation, there are several enterprises that produce similar products. They can formulate a general strategy by setting prices in the industry.
• Monopoly. This provides for the presence of only one product supplier who has complete control over the industry.

Characteristics of a monopoly

The generally accepted opinion is that perfect competition is practically a panacea, a compromise between the desires of the seller and the consumer. Most economic models take this structure as their basis. However, why does monopolization of markets occur in this case? This is due to the fact that this state of affairs is extremely beneficial to the manufacturer. First, a monopoly allows you to maximize profits. Secondly, the manufacturer sets the price for its products by determining the volume of output. Thirdly, under monopoly conditions there are large barriers to entry into the industry. The sole producer may not be afraid of a rapid increase in competition.

Forms

When market monopolization occurs, competition in the resulting structure is a fundamental feature for determining its type. There are three forms of monopoly:

• Natural. It arises due to objective reasons. This means that the demand for a given product is best satisfied by one firm. The reason may be due to the production process or customer service. For example, such industries include energy supply, water supply, and railway transportation.
• Administrative. This is being created with the participation of the state. It, through its bodies, grants a certain company 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 most common form. Its appearance is associated with the enterprises’ own initiative. Both progressive development and rapid centralization of capital through acquisitions and voluntary associations can lead to a monopoly position in the market.

Conditions for market monopolization

The structures under consideration can either be created through a series of acquisitions by one company of another, or be formed naturally in certain industries. The state can also create them. Monopolization of markets is a process centered on three main reasons:

• It is cheaper to produce a product by one company than by several. In this case we can talk about
• One enterprise is the owner of extremely rare resources or technologies. For example, Xerox at one time completely controlled the process of making copies. Knowledge about this process was protected by patents. This is an economic monopoly.
• Granting by the state to a certain enterprise the exclusive right to sell a certain good. In this case, a so-called administrative monopoly arises. In some states, only this form is permitted by law.

Sources of Monopoly Power

Under conditions of perfect competition, the price is equal to the average of the firms operating in the industry. For a monopoly it is higher. Therefore, this market structure seems undesirable for consumers. The main helper of monopolies are barriers to entry into the industry. They prevent competition from arising. Among them:

• Economic barriers.
• Legal restrictions.
• Deliberate actions.

The first group includes the largest number of restrictive measures. This includes economies of scale. The size of monopolies allows them to significantly reduce costs; ordinary firms simply cannot compete with them in the price of their products. Therefore, their activities cannot be effective, since the cost of the goods they produce is much higher.

Another economic constraint is capital investment requirements. If expensive equipment is needed to start production, this will also prevent the emergence of competitors. A monopoly may have a technological advantage or act as the owner of natural resources necessary to produce goods.

As for legislative restrictions, this group includes intellectual property rights, including patents. They give the monopoly the exclusive right to produce a product or technology for its production.

The third group of restrictions includes a variety of deliberate actions taken by the monopoly to prevent the development of competition in the industry. For example, she can lobby her interests in the government through various corrupt practices.

Natural monopoly

This form of the described market structure is often considered separately. This is due to debates about its usefulness not only for the monopolist itself, but also for consumers. It occurs when there is a large effect of economies of scale in production. A natural monopoly is a situation in which a single firm provides the market with products at a lower cost than several firms would do. A striking example is water and electricity supply. However, this does not mean that natural monopolies are completely harmless. Therefore, they need to be controlled by the state.

In international business

The world economy is increasingly influenced by globalization and internationalization. These two processes are responsible for the monopolization of the market for services and services at the international level. There are two types of such structures:

• Transnational monopolies. These include, for example, the food concern Nestlé or the oil company Standard Oil of New Jersey. Both of these companies are national in terms of the capital that has been invested in them, and international in the scope of their activities. Most of their production capacity is not located in their home country.
• International monopolies. This type includes the Agfa-Gefert trust, which produces photochemical products. This type of monopoly is international both in the scope of its activities and in the invested share capital.

Domestic realities

Monopolization of the Russian market has historical roots. In the USSR, the state had almost complete control over the economy. With the reduction in production in Russia, the demand for the products of industries - natural monopolies, except communications, is gradually decreasing. This led to a rapid rise in prices. Considering that these industries are fundamental, this provoked inflation. Some economists see the negative consequences of market monopolization as the main factor in the crises in Russia.

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

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

Examples of monopolies

The word “monopoly” originated in Ancient Greece and translated means “I sell one.”

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

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

For example, the natural monopoly is the metro. If the subway infrastructure is divided between two or three competing firms, real chaos will begin. But when the metro services are no longer suitable for the population, people will be able to get to their destinations by buses, trams, cars, and trains.

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

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

When considering what a monopoly is, one cannot ignore another related concept - “oligopoly”. This condition is much more common in economics. Oligopoly market divided between several companies. With the collusion of the main players, the market’s characteristics approach a monopoly (for example, mobile operators).

Classic - aircraft and shipbuilding, weapons production. What happens here is between two or three suppliers.

Types and forms of monopolies

The following forms of monopolies are distinguished:

1. Natural- arises when a business in the long term can only serve the entire market. An example is rail transportation. Typically, business activities require large expenses at the initial stage.
2. Artificial- usually created when several companies merge. The collusion of enterprises makes it possible to eliminate competitors faster. An educated structure resorts to such methods as prices, economic boycott, price maneuvering, industrial espionage, and speculation in securities.
3. Closed- protected from competitors by law. Restrictions may relate to copyright, certification, taxation, transfer of unique rights to own and use resources, etc.
4. Open- the only supplier with no legal barriers to competition. Typical for companies offering new, innovative products that have no analogues at the moment.
5. Double sided— a trading platform with one seller and one buyer. Both sides have power over the market. As a result, the outcome of the transaction depends on the negotiating ability of each participant.

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

1. private
2. state

Or by territorial based on 4 types:

1. local
2. regional
3. national
4. extraterritorial (global)

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

Monopoly in the history of social development

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

Ancient Greek philosopher Aristotle believed in the creation of a monopoly and farming. In one of his works, as an example, the sage talks about a subject who received money “at interest.” To make a profit, an enterprising man bought up all the iron in the workshops, and then resold it at a premium to merchants who arrived from other places.

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

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

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

In the 19th century, as a result of the rapid development of production, competition between manufacturers intensified. Cost reductions have led to the consolidation of factories and plants. Remaining players united into various communities( , pools), which acted as monopolists.

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

And the first industrial syndicate arose in St. Petersburg in 1886 with the participation of German partners. He united 6 companies producing nails and wire. Later, a sugar syndicate was born, then Prodamet, Produgol, Krovlya, Med, Prodvagon, etc.

Reasons for monopoly

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

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

1. large expenses for creating a business that do not pay off in a competitive environment;
2. establishment by the government of legislative barriers to business activities - certification, licensing, ;
3. policies that protect domestic producers from foreign competitors;
4. consolidation of companies as a result of acquisitions and mergers.

Antimonopoly legislation

Lack of competition leads to negative consequences in society:

1. inefficient use of resources;
2. product shortages;
3. unfair distribution of income;
4. lack of incentive to develop new technologies.

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

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

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There are quite a large number of different processes in the economy that affect its development and course. One of them is monopolization. This phenomenon has both positive and negative features, and must be controlled and regulated in order to avoid significant negative consequences. So what is monopolization, what is its essence and what is its impact?

Definition of the concept

To understand the question “what is monopolization”, it is necessary to understand that the market of perfect competition is characterized by the homogeneity of the goods offered, a large number of producers, freedom of trade and information. This situation is theoretically ideal and is taken as a model, but does not occur in reality. Its complete opposite is the establishment of a monopoly. That is, the market (or a separate area of ​​it) is occupied by one or several large companies that set pricing policies, regulate production volumes, etc. This is the process of monopolization. As a rule, it covers one sector of the economy. For example, in the countries of the post-Soviet space there is a monopoly in the housing and communal services almost everywhere. Monopolization of the industry in this case is characterized by the fact that services for the provision of electricity to the population and enterprises are provided exclusively by one company, gas - by a second, water - by a third, etc. The consumer does not have the opportunity to choose a supplier, there is no price competition, etc.

Negative facts

The problems of market monopolization directly follow from the definition of the concept itself. These include the following:

Positive sides

What is monopolization in terms of its impact on the economy? It cannot be said that this process has an exclusively negative impact, since there are several arguments in its favor. For example:

Consequences

When there is monopolization, there is usually a net loss to society. This is expressed in the fact that producers can almost unlimitedly increase prices for goods and services, regardless of changes in costs, and the consumer is forced to purchase them under established conditions. Since the buyer's income does not increase, the volume of purchased products decreases, which means the level of productivity of the entire industry decreases. Despite the fact that the monopolist receives unreasonably high profits, society as a whole loses from this process. In addition, the consequences stem from the negative aspects listed above.

How to recognize?

What is monopolization from a practical point of view? In different countries and industries, the value by which the level of competition is determined differs significantly. Theoretically, it is believed that if a third of the industry is occupied by the products of one manufacturer, half by three companies (manufacturers or service providers), and five cover more than 60%, then there is a low level of competition. A market is recognized as monopolized if the total number of enterprises is no more than ten. The calculation usually uses the Harfindel-Hirschman index, based on the total number of firms and their shares in the industry in percentage terms. The task of determining the level of monopolization and the degree of competition usually falls on the state, since this process significantly affects the economy and development of not only an individual industry, but the entire country as a whole, and as a result, the standard of living of the population.

State intervention

The presence and level of monopolization in the country's economy is regulated at the legislative level. Economic measures used to maintain competition and prevent monopoly and its negative effects include:

• Support, financing or provision of benefits to producers of substitute goods, scarce products, etc.
• Attracting investments in monopolized industries, including foreign ones, as well as assistance in their entry into the market
• Initiating and financing research and development activities to develop a low-competition industry.

Administrative government measures include:

• Control of creation, mergers, acquisitions, etc. of manufacturing companies.
• Forced demonopolization (separation, fragmentation).
• Penalties, administrative and criminal liability for attempts to monopolize the industry.

The most complex and sophisticated control system is considered to be that implemented in the United States. However, in recent years, Russia has also come to grips with the issue of market monopolization, including the adoption of the Competition Law, and the creation of a special committee to work in this direction.

And, well. monopolization f. Establishment of a monopoly. In this action there is monopolization, but there is no production. Butovsky 1847 2 86. Monopolization of capital. OZ 1877 11 2 17. We support the monopolization of the grain trade. Lenin 27 114. Russian platinum… Historical Dictionary of Gallicisms of the Russian Language

Concentration Dictionary of Russian synonyms. monopolization noun, number of synonyms: 2 concentration (23) ... Synonym dictionary

MONOPOLYZE, I ruin, I ruin; anna; owls and nesov., that. Do (do) what n. subject of monopoly (in 1 and 3 values). M. industry. M. foreign trade. Ozhegov's explanatory dictionary. S.I. Ozhegov, N.Yu. Shvedova. 1949 1992 … Ozhegov's Explanatory Dictionary

And, pl. no, w. (German: Monopolisation, French: monopolisation... Dictionary of foreign words of the Russian language

monopolization- MONOPOLIZATION1, i, g The process of establishing a monopoly and eliminating competition. The process of monopolization is actively underway in the oil industry. MONOPOLIZATION2, and, g Actions aimed at establishing a monopoly of the exclusive right of the state... ... Explanatory dictionary of Russian nouns

G. Establishment of a monopoly [monopoly I 1.], elimination of competition; assignment of an exclusive right to do something. Ephraim's explanatory dictionary. T. F. Efremova. 2000... Modern explanatory dictionary of the Russian language by Efremova

Monopolization, monopolization, monopolization, monopolization, monopolization, monopolization, monopolization, monopolization, monopolization, monopolization, monopolization, monopolization, monopolization (Source: “Full accentuated paradigm... ... Forms of words

monopolization- monopolization, and... Russian spelling dictionary

monopolization- (1 g), R., D., Ave. monopolises… Spelling dictionary of the Russian language

AND; and. to Monopolize and Monopolize. M. trade. M. production of buses... encyclopedic Dictionary

Books

• , Komolov O.O.. The work is devoted to the study of monopolistic trends in the modern economy. The author convincingly proves that monopolization is an objective trend in development...
• Monopolization as a factor in crisis processes and transformation of a modern market economy. Monograph, Komolov O.O.. The work is devoted to the study of monopolistic tendencies in the modern economy. The author convincingly proves that monopolization is an objective trend in development...