Competition (Latin concurrere - compete) is rivalry between participants in a market economy for the best conditions for the production, purchase and sale of goods. Such an inevitable clash is generated by objective conditions: the complete economic isolation of each market entity, its complete dependence on the economic situation and confrontation with other contenders for the greatest income.

The struggle of private commodity owners for economic survival and prosperity is the law of the market.

The essence of competition is also manifested in the fact that it... on the one hand, it creates conditions for which the buyer on the market has a great variety of opportunities to purchase goods, and the seller - to sell them. On the other hand, two parties take part in the exchange, either of which puts its own interests above the interests of the partner. As a result, both the seller and the buyer, when concluding an agreement, must make a mutual compromise when determining the price, otherwise the agreement will not take place, and each of them will suffer losses.

An indispensable condition for competition is the independence of the subjects of market relations from certain “superior” and external forces. This independence is manifested, firstly, in the ability to independently make decisions about the production or purchase of goods or services; secondly, in the freedom to choose market partners. In In the process of competition, economic entities seem to mutually control each other.Competition is also an important tool for regulating the proportions of social production in market conditions.

The following functions of competition are distinguished:

identifying or establishing the market value of goods;

equalization of individual costs and distribution of profits depending on various labor costs;

regulation of the flow of funds between industries and productions.

There are several types of competition. Let's consider the classification of types of market competition according to a number of criteria.

Types of competition by scale of development

Based on the scale of development, the following types are distinguished:

individual (one market participant strives to take his place in the sun - to choose the best conditions for the purchase and sale of goods and services);

local (among commodity owners of a certain territory);

sectoral (in one of the market sectors there is a struggle to obtain the greatest income);

intersectoral (competition between representatives of different sectors of the market to attract buyers to their side in order to extract more income);

national (competition of domestic commodity owners within a given country);

global (the struggle of enterprises, business associations and states of different countries in the world market).

According to the nature of development, competition is divided into free and regulated. Competition is also divided into price and non-price.

Price competition occurs, as a rule, by artificially driving down prices for a given product.

Non-price competition is carried out mainly through improving product quality, production technology, innovation and nanotechnology, patenting and branding and the terms of its sale, “servization” of sales.

Types of competition depending on the fulfillment of the prerequisites for competitive market equilibrium

We can distinguish between perfect and imperfect competition.

Perfect competition is competition based on the fulfillment of the prerequisites of competitive equilibrium, which include the following: the presence of many independent producers and consumers: the possibility of free trade in factors of production; independence of business entities; homogeneity, comparability of products; Availability of market information.

Imperfect competition is competition based on a violation of the preconditions of competitive equilibrium. Imperfect competition has the following characteristics: division of the market between several large firms or complete dominance: limited independence of enterprises; product differentiation and control over market segments.

Types of competition depending on the relationship between supply and demand (goods, services)

The following types of competition can be distinguished (varieties of perfect and imperfect competition):

• oligopolistic:

  monopolistic.

Pure competition is an extreme case of competition and is a type of perfect competition. The key characteristics of a purely competitive market are: a large number of buyers and sellers with little power to influence prices; undifferentiated.

Oligopolistic competition is imperfect competition. The key characteristics of an oligopolistic competition market are: a small number of competitors creating a strong relationship; greater bargaining power: the strength of a reactive position, measured by the elasticity of a firm's responses to competitors' actions; similarity of products and limited number of standard sizes.

Monopolistic competition is competition of an imperfect form. The main characteristics of the monopolistic competition market: the number of competitors and the balance of their forces; product differentiation

Types of competition depending on the ratio of the number of business entities regarding the investment of capital in the field of production or sales

There are intra-industry and inter-industry types of competition.

Intra-industry competition is competition between industry entities for more favorable conditions for production and sales of products, and obtaining excess profits. Intra-industry competition is the starting point in the competition mechanism. Main functions of intra-industry competition:

the possibility of establishing the social, market value of a product and the market equilibrium price;

stimulation of scientific and technological progress;

economic coercion to increase production efficiency;

identifying weak, less organized producers;

limiting the economic power of leaders.

Interindustry competition is competition between entrepreneurs in different industries for a more profitable application of capital based on the redistribution of profits. The emergence of inter-industry competition is based on unequal production conditions (different capital structure and speed of its turnover, fluctuations in market prices), leading to different rates of profit.

Main functions of inter-industry competition:

the possibility of modernizing industries, as new enterprises are created on a progressive scientific and technical basis:

increased intensification, increased production efficiency;

optimization of industry proportions, structural restructuring of the economy.

Types of competition in accordance with the need underlying the product

Horizontal and vertical types of competition can be distinguished.

Horizontal competition is competition between producers of the same type of product. It is a type of intra-industry competition, i.e. competition regarding the best production of functional properties and parameters of the product.

Vertical competition is competition between manufacturers of different goods that can satisfy the same customer need. For example, with the help of a TV you can satisfy the need for information, leisure, education, etc.

Types of competition depending on the relationship between supply and demand for a specific product

The following types of competition are distinguished, which are varieties of intra-industry competition: competition between sellers of goods and competition between buyers of goods.

The higher the degree of competition among sellers, the lower the degree of competition between buyers and vice versa. The vectors of action of these two trends are opposite, their impact on society is the same, so there is a certain balance between them. When the demand and supply curves interact, a period of relative equilibrium arises, which has three phases: short-term. medium and long. In short-run equilibrium, price is determined by demand. As the time period lengthens, the price is already determined by the cost, i.e. costs.

LECTURES

By academic discipline

"FUNDAMENTALS OF ECONOMICS"

For students of the Faculty of Primary School Teacher Training

(for independent work)

T. 7. Competition in a market economy

T. 8. Income in a market economy.

T. 9. Money and monetary circulation.

T. 10. World economy.

Topic 7. Competition in a market economy

Competition. Classification of competition, its sides and types.

Monopoly. Classification of monopolies. Types of competition.

Methods of competition policy. Product competition. Role functions of firms. Competitive strategy of firms.

Antimonopoly policy.

Competition (from the perspective of economics) - represents the struggle of sellers (producers of goods and services) to better satisfy the requirements of buyers (consumers of goods and services), as well as the competition of buyers to purchase the goods they need on the most favorable terms.

The struggle of private commodity owners for economic survival and prosperity is the law of the market.

Competition classification:

1.By scale of development:

a) individual– one market participant strives to take “his place in the sun” - to choose the best conditions for the purchase and sale of goods and services;

b) local- conducted among commodity owners of a limited territory;

c) industry– in one of the market sectors there is a struggle to obtain the greatest income;

d) national– competition between domestic sellers and buyers within a given country;

e) international– the struggle of enterprises, business associations and states of different countries on the world market.

2. By the nature of development:

A) free(there are many independent sellers on the market, access to and exit from the market is not limited by anyone or anything);

B) adjustable.

3. By methods of competition:

A) price– price competition: they offer a product cheaper than a competitor; attract customers with various discounts, bonuses, cheap sales, etc.;

B) non-price– 1) ensuring technical superiority, high quality and reliability of products; 2) the best sales system and after-sales service (credit, guarantees, maintenance); 3) attractive advertising and product design (special style, bright packaging, brand name, etc.).

The non-price method is provided product differentiation– endowing it with “branded” features that distinguish it from similar products of competitors.

Competition happens:

Effective and ineffective (in terms of its effectiveness);

Conscientious and dishonest (from the point of view of legislation);

Intra-industry and inter-industry;

National and international (from the point of view of the space in which competition is taking place);

Official and shadow.

Positive aspects of competition:

1.- a powerful stimulator of production growth and increasing its efficiency;

2.- high level of motivation of business participants: commodity producers - to produce useful and high-quality products, a variety of goods and a wide range of choices for consumers;

3.- counteracting monopolism on a particular product – by reducing prices.

4. Competitors mutually control each other (better than any government controller).

Competition is the basis of continuous progress in society.

Disadvantages of competition : conflict, instability, bankruptcy of enterprises, mass layoffs of workers and job cuts.

Competition is constantly under threat from collusion among businessmen or excessive concentration of their economic power. The result is a kind of enemy of competition - monopoly.

Monopoly - a large owner who seizes the vast majority of the market space for the purpose of his enrichment.

Classification of types of monopolies:

1. Taking into account the extent of economic coverage:

a) on the scale of a certain industry – pure monopoly (there is one seller, access to the market is closed to possible competitors, the seller has full control over the number of goods intended for sale and their price).

B) on the scale of the national economy – absolute monopoly (it is in the hands of the state or its economic bodies, for example, a state monopoly of foreign trade, etc.).

IN) monopsony (pure and absolute ) – one buyer of resources and goods.

2. Depending on the nature and causes of occurrence :

A) natural monopoly– arises and exists for objective reasons. For example,:

1). in industries: (automotive, gas, aluminum, energy, railways, etc.), where large-scale production is economically justified, providing greater efficiency, low costs, and therefore the ability to buy products at lower prices.

2) where it is better to have a single economic complex(city metro, water supply, communications), since the division of these complexes into separate competing enterprises would lead to unjustified duplication of capital structures and increased costs.

3) monopoly is natural in the extraction of rare minerals or the production of rare varieties of tea, grapes, tobacco in especially favorable natural conditions for this, etc.

B) legal - are formed legally. These include the following forms of monopolistic organizations:

3) trademarks.

IN) artificial monopoly – associations of enterprises created to obtain monopolistic benefits. These monopolies deliberately change the structure of the market:

Create barriers to entry of new firms into the industry market;

Restrict outsiders (enterprises that are not included in the monopoly association) access to sources of raw materials and energy resources;

They create a very high (compared to new firms) level of technology;

- they “clog” new companies with well-placed advertising.

To obtain market power and super-profits, individual companies gigantically enlarge their production, absorb competitors or unite into various monopolistic unions so as not to compete, but to jointly own the market. Historically, three main forms of unions have developed: cartels, syndicates and trusts . The main differences between them are the breadth of agreements between the participants and the scale of their association.

Monopoly- market dominance of one seller.

Oligopoly– market dominance of a few sellers.

Monopsony– market dominance of one buyer.

Oligopsony– market dominance of a few buyers.

Forms of market dominance :

The simplest of them – cartel - assumes that its participants agree on the division of markets, production quotas (who produces and how much), sales prices, and themselves sell the created products.

Syndicate – merger of a number of enterprises manufacturing homogeneous products. They also organize joint sales of products and uniform purchases of raw materials in certain quantities and at certain prices.

Trust - a monopoly in which joint ownership of a given group of entrepreneurs is created for the means of production and finished products.

Concern - a union of formally independent enterprises (usually from different industries, trade, transport and banks), within the framework of which the parent company organizes financial (monetary) control over all participants.

Consortium – a temporary agreement between several banks or enterprises for joint financial or commercial transactions on a large scale.

If at the beginning of capitalism free competition dominated, then at the turn of the 19th - 20th centuries, with the development and consolidation of production, monopoly began to gain strength. In the modern economy, competition and monopoly inevitably and contradictorily coexist and are sometimes intricately intertwined.

By the nature of the relationship between firms (enterprises) - competitors in one market or another are distinguished 4 types of competition , according to which there are 4 types of markets:

Market of pure competition (perfect);

Market of monopolistic competition (imperfect);

Market of oligopolistic competition (imperfect);

Market of pure monopoly (imperfect).

Competition –the presence of a large number of buyers and sellers of a product + freedom of buyers and sellers to enter and leave a particular market.

Pure competition -exists , if a large number of firms sell the same goods. The market for each company is small, demand is perfectly elastic since an increase in price stops sales, and a decrease creates losses for the company. There is no price control because the product is standard. It is easy for new companies to enter the market. In pure competition, distinctive advantages are not possible because prices and products are the same. The relationship between sellers and buyers is casual. Attempts by competitors to capture a larger market share for this type of product are stopped. Pure competition is most favorable. The production of the desired products (goods and services) is carried out in the least expensive way, using the minimum amount of resources, and the lowest prices are set. To achieve success, competing enterprises strive to create a reliable business reputation for themselves, sell products at low prices, and try to attract as many traders and consumers as possible to their products. Price competition prevails. (Example of a market with pure competition: agricultural products market).

Monopolistic competition – assumes combination of monopoly and competition– are only present on the market dozens of manufacturers of similar but not identical products. But: each manufacturer can limit the impact on the aggregate supply, demand and price of goods by the release of its products. It is easy for new firms to enter the market because start-up costs are low.

Due to the larger number of producers and their rather weak influence on each other, producers remain relatively independent and there is no “collusion” between them to artificially limit production, demand or supply to increase prices.

Manufacturers focus on product differentiation– giving your product unique properties for the buyer. It is product differentiation that is the main argument in conditions of monopolistic competition. ( Example of a market with monopolistic competition: the market for consumer goods - furniture, clothing, shoes, books).

Oligopoly (oligopolistic competition) – dominance in the market of several large producers, each of which controls a significant part of the enterprise, demand and prices for a particular product. Oligopolies are interdependent and their pricing behavior tends to agree on the purpose and price change. Prices under oligopolistic competition are less flexible and higher than under pure monopolistic competition. Oligopolies pay high attention to price factors. Penetration of new firms into the market is difficult due to high capital costs. ( An example of a market with oligopolistic competition: production of steel, aluminum, cars, wholesale trade, etc.).

Pure monopoly -The industry consists of one firm and the buyer is completely deprived of any choice. The company controls the demand and price of this product. Most often, it resorts to artificially creating a commodity shortage and sets a monopoly high price. It is difficult for other firms to enter a monopolized industry. Maintaining monopoly power over a given market for a long time is possible only with state support(as it was in the USSR). ( Example of a market with a pure monopoly (natural): gas utilities, electric and water companies).

If the lack of competition among producers is monopoly then the lack of consumer competition – monopsony.

The real economy is characterized by the coexistence of all types of competition. In developed countries, monopolistic competition prevails. It is followed by oligopolistic competition. Pure competition and pure monopoly are extremely rare in practice.

The mechanism of market competition is a real tool that, despite possible deviations, returns the price to the level of equilibrium of supply and demand and harmonizes the interests of producers and consumers.

The market equilibrium price is a means of self-regulation of relations between buyers and sellers. But this mechanism does not always work flawlessly. First of all, because market competition does not function in its pure form. In society there are certain social and political associations with their own ideas about fairness and “correctness” of price. This role is played by modern producers - monopolists (they inflate prices, limit production volumes). Trade unions keep the price of labor (wages) at a higher level. Even the state in a market economy is sometimes a supporter of lower prices, especially for goods without substitutes - for example, bread, medicine.

Intensity of competition , or the pressure of competitors on each other, is inversely proportional to the number of competitors and is expressed by the ratio 1/P, where P is the number of competitors in a given market.

In the first option, I = 1/P = 1/1000 = 0.001;

In the second option, I = 1/10 = 0.1 is higher.

Conclusion: reducing the number of competitors during the competition does not reduce, but increases its intensity and intensity.

The variety of manifestations of competition presupposes different methods of enterprise competitive policy. There are:

- price and non-price methods(the latter is preferable) competition policy.

The price method is carried out by reducing or increasing the price of your product and is applied in conditions:

Relatively slow change in demand;

Insufficient capital mobility;

Prevalence of intra-industry competition;

In markets with seller priority - i.e., an excess of demand over supply, and more intense competition among buyers;

In conditions of predominance of pure competition.

The price method of competition is ineffective, because competitors may take retaliatory steps. This complicates the planning and management of the company and excludes financial stability. This method is used when introducing a company into new markets. For example, when developing new markets, the Japanese reduce prices by 10%.

Non-price methods – this is a wider range of methods of active activity in the market, namely:

Expanding the range of products and improving the quality of goods;

Determination of the place and conditions of sale;

Providing service and after-sales service, etc.

Non-price method is carried out by distinguishing your product from a number of competing products and giving it unique properties for the buyer.

Non-price competition is effective competition that ensures relative financial stability and management of the company. Although it requires more effort and financial costs compared to the price, it more than pays off if successful.

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A person lives in a social environment where not only moral ideas and moral values, not only social connections are important to him, but also his own separate place, his own significance. A person strives to present to society all his abilities and talents, for which society may reward him. Considering that someone else may be endowed with such abilities, the individual begins to strive to achieve mastery in his field, to be the first in it, in order to receive the maximum reward and be in demand. In this case, rivalry begins between people, a struggle that is usually called competition. This concept first appears at the end of the 18th century, and the positive meaning of this definition was caused by the development of capitalist relations, where competition is the main driving force of economic relations.

Competition, from a moral point of view, can be fair or unfair. Fair competition implies the presence of such qualities as dignity, efficiency, a person’s desire to achieve new results, the need to acquire knowledge, and polish his professional skills. It is generally accepted that in this case a person consciously develops his abilities and reaches the heights of public recognition and personal inner satisfaction.

But it can be built on the use of unscrupulous methods, when generally accepted laws are violated and moral values ​​are violated. A person’s internal egoism, high self-esteem, as well as the desire to achieve the desired goal by any means, turn competition into a struggle using dishonest and inhumane methods. Such competition can cause mental and physical suffering, and also undermines the principle of fairness.

Competition is expressed not only in interpersonal rivalry; its laws operate at the level of social groups and states. In a historical sense, at a certain stage, competition was the driving force behind the development of society; those social groups that most effectively used the opportunities available to them had an advantage.

In modern society, competition is a necessary condition for the development of the economy and the services market. At the legislative level, documents are adopted to prevent the emergence of monopolies and protect competition. In economics, competition is inseparable from the market for goods and services.

And yet, competition in society carries a destructive meaning; it is much more effective for society when people work with high dedication for the benefit of this society, receiving appropriate rewards in return.

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- the economic process of interaction, interrelation and struggle between enterprises operating on the market in order to provide better opportunities for marketing their products and satisfying the diverse needs of customers.

The following functions of competition are distinguished:

• identifying or establishing the market value of goods;
• equalization of individual costs and distribution of profits depending on various labor costs;
• regulation of the flow of funds between industries and productions.

There are several types of competition. Let's consider the classification of types of market competition according to a number of criteria.

Types of competition by scale of development

Based on the scale of development, the following types are distinguished:

• individual (one market participant strives to take his place in the sun - to choose the best conditions for the purchase and sale of goods and services);
• local (among commodity owners of a certain territory);
• sectoral (in one of the market sectors there is a struggle to obtain the greatest income);

• intersectoral (competition between representatives of different sectors of the market to attract buyers to their side in order to extract more income);
• national (competition of domestic commodity owners within a given country);
• global (the struggle of enterprises, business associations and states of different countries in the world market).

Types of competition by nature of development

By the nature of development competition is divided into free and regulated. Competition is also divided into price and non-price.

Price competition arises, as a rule, by artificially driving down prices for a given product. At the same time, price discrimination is widely used, which occurs, among other things, when a given product is sold at different prices and these price differences are not justified by differences in costs.

Price competition is most often used in the service sector, when providing services for transporting products; when selling goods that cannot be redistributed from one market to another (transportation of perishable products from one market to another).

Non-price competition is carried out mainly through improving product quality, production technology, innovation and nanotechnology, patenting and branding and the conditions of its sale, “servization” of sales. This type of competition is based on the desire to capture part of the industry market by releasing new products that are either fundamentally different from their predecessors or represent a modernized version of an old model.

Non-price competition through the sale of products is called competition based on sales conditions. This type of competition is based on improving customer service. This includes influencing the consumer through advertising, STIs, PR, merchandising, and customer service.

The following main areas of competitive activity of the company can be distinguished:

• competition in the field of raw materials markets for gaining positions in resource markets;
• competition in the sale of goods and/or services on the market;
• competition between buyers in sales markets.

Since competition in marketing is usually considered in relation to the consumer, different types of competition correspond to certain stages of consumer choice.

In accordance with the stages of consumer decision-making about a purchase, the following types of competition can be distinguished:

• competing desires. This type of competition is due to the fact that there are many ways for consumers to invest money;
• functional competition. This type of competition is due to the fact that the same need can be satisfied in different ways. This is a basic level of studying competition in marketing;
• inter-firm competition. This is a competition between alternatives to the dominant and most effective ways to satisfy a need:
• interproduct competition. This is competition between a company's products. It is not competition in essence, but is a special case of an assortment range, the purpose of which is to create an imitation of consumer choice.

Types of competition depending on the fulfillment of the prerequisites for competitive market equilibrium

We can distinguish between perfect and imperfect competition.

- competition based on the fulfillment of the prerequisites of competitive equilibrium, which include the following: the presence of many independent producers and consumers: the possibility of free trade in factors of production; independence of business entities; homogeneity, comparability of products; Availability of market information.

Imperfect competition - competition based on the violation of the preconditions of competitive equilibrium. Imperfect competition has the following characteristics: division of the market between several large firms or complete dominance: limited independence of enterprises; product differentiation and control over market segments.

Types of competition depending on the relationship between supply and demand (goods, services)

The following types of competition can be distinguished (varieties of perfect and imperfect competition):

• clean;
• oligopolistic:
• monopolistic.

Pure competition represents the limiting case of competition and belongs to the type of perfect competition. The key characteristics of a purely competitive market are: a large number of buyers and sellers with little power to influence prices; undifferentiated, completely interchangeable goods that are sold at prices determined by the relationship between supply and demand (the goods are similar, there are many substitutes); complete lack of market power.

The formation of a pure competition market is typical for industries with a low degree of monopolization and concentration of production. This group includes industries that produce products of mass demand (food products, light industry products and household appliances, etc.).

Factors influencing the level and degree of pure competition: quality requirements, degree of processing of raw materials, transport factor. Moreover, the listed factors are closely interrelated: the lower the requirements for the level and degree of processing of raw materials, the level of quality, the more the influence of the transport factor increases: the higher the requirements for the level and degree of processing of raw materials, the level of quality, the less the influence of the transport factor. The relationship between these factors has a significant impact on the level of competitiveness of market entities and the choice of strategies in domestic and international markets. For example, in the building materials industry: consumers of industrial wood (low degree of processing of raw materials and quality requirements) focus on local producers, increasing their level of competitiveness, regardless of the quality parameters of the products, since the factor of the transport component in the selling price is very important: consumers of construction and finishing materials luxury materials are focused on imported manufacturers, reducing the level of competitiveness of local manufacturers, since high requirements for product quality make the transport component less important.

Oligopolistic competition- This is competition related to an imperfect species. The key characteristics of an oligopolistic competition market are: a small number of competitors creating a strong relationship; greater bargaining power: the strength of a reactive position, measured by the elasticity of a firm's responses to competitors' actions; similarity of products and limited number of standard sizes. The formation of an oligopolistic market (the entire supply volume is provided by only a few firms) is typical for the following industries: chemical industry (production of polyethylene, rubber, technical oils, ethyl liquid, some types of resins); mechanical engineering and metalworking industry (production of machinery and equipment, steel, rails, pipes, etc.).

- This is competition, of an imperfect form. The main characteristics of the monopolistic competition market: the number of competitors and the balance of their forces; differentiation of goods (from the buyer’s point of view, goods have distinctive qualities that are perceived as such by the entire market). Differentiation can take many forms: the taste of a drink, a special technical characteristic, an original combination of characteristics, quality and range of services, brand strength; increasing market power due to differentiated goods, which protects the company and allows it to earn profits above the market average. The formation of a monopoly market is typical for industries where competition is difficult due to their technological features (infrastructure industries: transport, communications, energy).

Perfect competition is not a natural state of the market. In some industries and areas of activity, competition is impossible (difficult) due to:

• technological features of industries whose fixed costs are so high that economies of scale (decrease in unit costs as production volumes increase) are possible only when the producers are extremely large both in absolute size and in market share (infrastructure industries: transport , communications, energy);
• exceptionally high sunk costs, i.e. assets embodied in the main production are specific and cannot be reoriented to other types of products and types of markets;
• availability of excess production capacity to meet “peak” demands for products (services).

These features create conditions for the existence of monopolies. Term "monopoly" can be used relatively:

• business entity, those. some economic structure that has some advantages in the production of goods, services or work;
• market conditions, in which either one or a very narrow circle of commodity producers dominates;
• type of economic relations, the essence of which is expressed in the ability of one or several groups of commodity producers to impose their will on everyone else.

Types of monopolies:

1. Natural (sustainable), which is possessed by economic entities and owners who have at their disposal rare and freely irreproducible resources. Natural monopolies, unlike other enterprises of the market structure, occupy a special place in the system of economic relations, which determines their unique properties and the specific role they occupy in the economy. A natural monopoly in economic theory usually refers to an industry in which the gross cost of production is lower if all output is produced by a single firm than if the same amount of output were divided between two or more firms. A natural monopoly is also recognized as an industry in which there is only one firm left as a result of unlimited competition, or an industry in which competitive forces form a non-competitive structure.

2. Artificial, which means the concentration of objects of economic relations in someone’s hands.

3. Innovative- a special case of competition when one manufacturer in the market competes with a large number of buyers due to a unique product or the uniqueness of its properties. The innovator's monopoly has time limits determined by the speed of spread of technological innovations (copying) and the emergence of competitors.

Signs of monopolization:

• opposition to a large number of buyers - due to a natural, artificial monopoly or monopoly of the innovator;
• the presence of increased market power and high “barriers to entry” for new competitors;
• novelty and originality of goods, absence of substitutes;
• a high share of the largest enterprises in the total production volume of the industry or country, the number of employed workers;
• the ability to dictate prices to the market within certain limits;
• the possibility of appropriating monopoly high profits;
• imposing contract terms that determine the unequal position of competitors:
• division of markets by territorial basis, volume of sales or purchases.

The presence of a monopoly can have both positive and negative effects on enterprises:

• positive— reduction of unit costs due to economies of scale; technological progress due to a high degree of concentration of resources, effective implementation of the interests of society in industries where it is inappropriate to stimulate competition, etc.;
• negative— violation of the fundamental rights of final consumers, since they are forced to purchase goods at inflated prices with artificially low supply: excessive concentration of production suppresses the development of entrepreneurship, as a result of which the mechanism of pure competition operates with less efficiency; structural imbalances arise in market development.

Types of competition depending on the ratio of the number of business entities regarding the investment of capital in the field of production or sales

There are intra-industry and inter-industry types of competition.

Intra-industry competition- this is competition between industry entities for more favorable conditions for production and sales of products, and obtaining excess profits. Intra-industry competition is the starting point in the competition mechanism. Main functions of intra-industry competition:

• the possibility of establishing the social, market value of a product and the market equilibrium price;
• stimulation of scientific and technological progress;
• economic coercion to increase production efficiency;
• identifying weak, less organized producers;
• limiting the economic power of leaders.

Inter-industry competition- this is competition between entrepreneurs in various industries for a more profitable investment of capital based on the redistribution of profits. The emergence of inter-industry competition is based on unequal production conditions (different capital structure and speed of its turnover, fluctuations in market prices), leading to different rates of profit.

Main functions of inter-industry competition:

• the possibility of modernizing industries, as new enterprises are created on a progressive scientific and technical basis:
• increased intensification, increased production efficiency;
• optimization of industry proportions, structural restructuring of the economy.

In conditions of imperfect competition, changes occur in the manifestations of inter-industry competition: the influence of factors slowing down the flow of capital (the level of development of transport, communications, economic information, credit relations) increases; Pricing for the products of small enterprises occurs mainly according to the laws of perfect competition, and for the products of large enterprises - in the form of price control on their part, which is aimed at stabilizing the economy. The market is dominated by a set price, which can no longer make the same movement around the value. The correspondence of prices to values ​​is established not by price fluctuations around value, but by value fluctuation around the fixed price of products: the persistence of differences in labor productivity, barriers inherent in the modern structure of the economy, leads to the fact that profit is not distributed equally with the invested capital, but remains there, where it was produced.

Types of competition in accordance with the need underlying the product

Horizontal and vertical types of competition can be distinguished.

Horizontal competition- This is competition between producers of the same type of product. It is a type of intra-industry competition, i.e. competition regarding the best production of functional properties and product parameters (TV manufacturers compete with each other in diagonal size, sound brightness, additional services: after-sales service, delivery conditions, etc.). Those become leaders. who applies innovations in the field of technology, product, packaging, know-how, etc.

Vertical competition- This is competition between manufacturers of different goods that can satisfy the same buyer need. For example, with the help of a TV, you can satisfy the need for obtaining information, leisure, training, etc. The need for obtaining information, in addition to TV, can be satisfied with the help of the telephone, newspapers, magazines, radio and other sources that relate to other sectors of the production of goods, which and is a type of inter-industry competition.

Types of competition depending on the relationship between supply and demand for a specific product

The following types of competition are distinguished, which are varieties of intra-industry competition: competition between sellers of goods and competition between buyers of goods.

The higher the degree of competition among sellers, the lower the degree of competition between buyers and vice versa. The vectors of action of these two trends are opposite, their impact on society is the same, so there is a certain balance between them. When the demand and supply curves interact, a period of relative equilibrium arises, which has three phases: short-term. medium and long. In short-run equilibrium, price is determined by demand. As the time period lengthens, the price is already determined by the cost, i.e. costs.

Federal Agency for Education

State educational institution

higher professional education

"OMSK STATE TECHNICAL UNIVERSITY"

Department: Communications and information security

Abstract on the discipline "Economics"

Topic: Competition, its place and role in a modern market economy

Is done by a student:

Kuzyukov Viktor Vasilievich

Group: ZRP-318 (210402)

Option: No. 10

Checked by the teacher:

Omsk 2011

Introduction

1. Types of competition

2. Methods of competition: price and non-price. Market and non-market forms

3. The place and role of competition in a modern market economy

Conclusion

Bibliography

Introduction

If we consider what the term “Competition” means, the most general definition will sound like:

Competition (lat. concurrentia, from lat. concurro - running, colliding) - struggle, rivalry in any area.

Competition exists in many areas and in every area, not excluding economics, it cannot be limited to just one definition, so I will give even more detailed ones and closer to economics:

Competition is the center of gravity of the entire market economy system, a type of relationship between producers regarding the setting of prices and volumes of supply of goods on the market. The incentive that motivates a person to compete is the desire to surpass others.

Competition is a dynamic, accelerating process. It serves to better supply the market with goods.

Competition is an element of the market mechanism that ensures the interaction of market entities in the production and marketing of products, as well as in the area of ​​investment of capital.

Competition (from the Latin “concurrere” - to collide) means rivalry between individual subjects of a market economy for the most favorable conditions for the production and sale (purchase and sale) of goods.

Competition is the engine of economic progress. This is explained by the fact that market competition leads to success if the entrepreneur cares not only about maintaining, but also expanding his production, for which he strives to improve technology and organization, improves the quality of goods, reduces the cost of producing a unit of output, and thereby has the opportunity to reduce prices, expand the range of goods, improve trade and post-trade customer service.

As you can see, the concept of competition is so ambiguous that it is not covered by any universal definition. This is both a way of managing and a way of existence of capital when one capital competes with other capital. Competition is seen as both the main essential feature, the property of commodity production, and the method of development. In addition, competition acts as a spontaneous regulator of social production.

Societies that rely on competition are more successful in achieving their goals than others, and that it is competition that shows how things can be produced more efficiently. It promotes the displacement of inefficient enterprises from production, the rational use of resources, and prevents the dictatorship of producers in relation to the consumer. This is the undoubted positive role of competition in social development and the effectiveness of competitive markets.

But competition is far from idyllic. At all times, the deep roots of competitive relations have been the need for constant struggle for better conditions of existence. As a result of this struggle, there were not only winners - happy rivals who increased their wealth, but also losers. Competition is associated with such negative aspects of its manifestation as ruin, impoverishment of a certain part of the population, unemployment, instability, differentiation, social injustice, inflation, the formation of monopolies, etc.

The inability to influence price is a key point in the modern interpretation of the concept of competition. Joseph Schumpeter argued that, at least in terms of economic growth, competition is the competition between old and new: new products, new technologies, new sources of supply, new types of organization

Today it is clear that the fiercer the competition in the domestic market, the better prepared national firms are to fight for markets abroad, and the more advantageous the situation for consumers in the domestic market both in terms of prices and product quality. After all, competitive products must have consumer properties that distinguish them favorably from similar products of other competitors.

With Russia's transition to market economic methods, the role of competition in the economic life of society has increased significantly. At the same time, maintaining a competitive environment in the Russian Federation, as in all developed countries at present, has become an important task of state regulation of the economy. This means that the study of competition and its role in the development of market relations is currently the most important task of economic research in our country.

1. Types of competition

Competition is distinguished:

· functional (this is competition for a certain product);

Functional competition arises due to the fact that any need can be satisfied in a variety of ways. For example, for sports or intellectual games - these are chess, checkers, backgammon, cards, etc.; for tourism - boats, bicycles, cars, etc.

· species (price and quality);

Species competition arises due to the availability of goods intended for the same purpose, but differing in some important characteristics. For example, tape recorders with different output power levels.

· intercompany (among individual enterprises, firms);

Interfirm competition is the struggle between enterprises of the same or different industries for a limited amount of effective demand. Occurs between enterprises producing goods or providing services that relate to inter-generic, inter-group, intra-group and inter-company competing goods. An example would be garment industry enterprises that produce clothing, as well as tailoring studios.

· intra-industry and inter-industry.

Intra-industry competition, one of the types of capitalist competition, a specific form of antagonistic rivalry and struggle between individual commodity producers, capitalist entrepreneurs, joint-stock companies, monopolistic capitalist unions engaged in the same sector of the economy.

Inter-industry competition, one of the types of capitalist competition; a specific form of struggle between individual capitalists, joint-stock companies and monopolistic associations. Capitalism is the process of transfer of capital from one industry to another, due to which the proportions of reproduction of social capital spontaneously take shape.

Depending on the relationship between the number of producers and the number of consumers, the following types of competitive structures are distinguished:

a) a large number of independent producers of some homogeneous product and a mass of isolated consumers of this product. The structure of connections is such that each consumer, in principle, can buy a product from any manufacturer, in accordance with his own assessment of the usefulness of the product, its price and his own ability to purchase this product. Each manufacturer can sell a product to any consumer, based only on its own benefit. No single consumer acquires any significant share of total demand. This market structure is called polypoly and gives rise to so-called perfect competition.

b) a huge number of isolated consumers and a small number of producers, each of which can satisfy a significant share of the total demand. This structure is called an oligopoly and gives rise to so-called imperfect competition. The limiting case of this structure, when a mass of consumers is opposed by a single producer capable of satisfying the total demand of all consumers, is a monopoly. In the case when the market is represented by a relatively large number of producers offering heterogeneous (dissimilar) products, they speak of monopolistic competition;

c) a single consumer of a product and many independent producers. In this case, a single consumer acquires the entire supply of goods, which is supplied by all the many producers. This structure gives rise to a special type of imperfect competition called monopsony (monopoly of demand);

d) the structure of relationships, where a single consumer is opposed to a single producer (bilateral monopoly), is not competitive at all, but it is also not a market one.

Competition in its content is very contradictory. On the one hand, it expresses the desire for freedom, economic independence - this is a manifestation of centrifugal forces. On the other hand, there is the desire of the competitors themselves to protect themselves from the vicissitudes of the struggle, which indicates a centripetal tendency to unite efforts, a kind of economic solidarity, the guarantor of which is the state, laws of behavior in the market that protect the interests of national entrepreneurs from the competition of foreign capital, etc. Moreover, the desire to win the competition leads to the establishment of a dominant position in the market, the seizure of market power, and the formation of monopolies. Competition and monopolism are not two different mutually negating economic forces, but two sides of the same market interaction.

2. Methods of competition: price and non-price.

Market and non-market forms

monopoly oligopoly monopsony competition

Competition is conducted for a limited volume of effective demand. It is the limited demand that forces firms to compete with each other. After all, if demand is satisfied by the product and/or service of one company, then all others are automatically deprived of the opportunity to sell their products. And in those rare cases when demand is practically unlimited, the relationship between firms offering similar products is often more like cooperation than competition. This situation, for example, was observed at the very beginning of reforms in Russia, when a small number of goods that began to arrive from the West were faced with an almost insatiable domestic demand.

Competition can be divided into fair and unfair.

Basic methods of fair competition:

· improving product quality,

· development of pre- and post-sales services,

· creation of new goods and services and use of scientific and technological advances, etc.

The main methods of unfair competition:

· economic (industrial espionage);

· counterfeiting competitors' products;

· bribery and blackmail;

· consumer fraud;

· currency fraud;

Market competition develops only in accessible market segments. Therefore, one of the common techniques that firms resort to in order to ease the pressure of competitive pressure on themselves is to enter market segments that are inaccessible to others. All these are means of competition and at the same time means of evading it.

In economic literature, it is customary to divide competition into:

· price (competition based on price);

· non-price (competition based on the quality of use value).

Price competition dates back to the days of free market competition, when even similar goods were offered on the market at a wide variety of prices.

Reducing prices was the basis by which the industrialist (merchant) distinguished his product, attracted attention and, ultimately, won the desired market share.

In the modern world, price competition has lost such importance in favor of non-price methods of competition. This does not mean, of course, that “price war” is not used in the modern market; it exists, but not always in an explicit form. The fact is that “an open price war is possible only until the firm exhausts its reserves for reducing the cost of goods. In general, open price competition leads to a decrease in profit margins, a deterioration in the financial condition of firms and, as a consequence, to ruin. Therefore, firms avoid conducting price competition in an open form. It is currently usually used in the following cases:

· outsider firms in their fight against monopolies, to compete with which, in the sphere of non-price competition, outsiders have neither the strength nor the capabilities;

· to penetrate markets with new products;

· to strengthen positions in the event of a sudden aggravation of the sales problem.

With hidden price competition, firms introduce a new product with significantly improved consumer properties, and raise the price disproportionately little.

Non-price competition brings to the fore the higher consumer value of a product than its competitors (firms produce goods of higher quality, more reliable, provide a lower consumption price, and have a more modern design).

Pre- and after-sales customer service plays an important role, because... a constant presence of manufacturers in the sphere of consumer services is necessary. Pre-sales service includes meeting consumer requirements for delivery conditions: reduction, regularity, rhythm of deliveries (for example, components and assemblies). After-sales service - the creation of various service centers to service purchased products, including the provision of spare parts, repairs, etc.

Due to the great influence of the media and the press on the public, advertising is the most important method of competition. With the help of advertising, you can shape the opinion of consumers about a particular product in a certain way, both for the better and for the worse.

Another type of non-price competition is product differentiation. That is, offering a wide range of types, styles, brands of a given product. At the same time, the range of free choice expands, and the variety and shades of consumer tastes are more fully satisfied. It is true that there is a danger that the increase in product assortment may reach a point where the consumer becomes confused, wise choices become difficult and purchases take a long time.

Each firm has a product that is currently different from its competitors. Any product has its own reserves for its further change and development. Therefore, very often, in addition to releasing new products to the market, manufacturers use a modification policy, i.e. change in the most significant technical and operational properties, quality of the product, change in external design or form of packaging. Thanks to this, the company can change the image of the product and orient it to new sales segments.

Improving its products gives a company a long-term advantage. The entry into the market of products of higher quality or new use value makes it difficult for a competitor to respond, because The “formation” of quality goes through a long cycle, starting with the accumulation of economic, scientific and technical information.

Illegal methods of non-price competition include:

· industrial (economic) espionage;

· poaching specialists who know production secrets;

· production of counterfeit goods, outwardly no different from genuine products, but significantly worse in quality, and therefore usually much cheaper;

· fraud with business reporting;

· hiding defects, etc.

The main objects of attention of industrial espionage are patents, drawings, production secrets, technologies, cost structure; economic espionage, in addition to industrial secrets, covers macroeconomic indicators and includes exploration of natural resources, identification of industrial reserves; In connection with the development of marketing, collecting information about the tastes and incomes of various social groups in society is becoming increasingly valuable.

All industrial monopolies have secret laboratories where they compare the levels of technical solutions, quality, performance and reliability of their products with similar products of competitors in all respects. In these laboratories, every component and assembly of their own machines and similar products of competitors is disassembled in order to objectively compare them and identify the true value of a particular product. All the disadvantages or advantages of one’s own and other people’s products are taken into account. Everything that is best from competitors is adopted and adapted for their own machines, mechanisms and designs, if it is possible to bypass patent laws or if it is beneficial to the company.

Along with well-known methods, modern industrial espionage uses the latest achievements of science and technology. Very often, various kinds of microscopic devices based on various electronic circuits began to be used.

Special technology allows you to intercept any information transmitted orally, via telephone, fax, or computer. Window glass can serve as microphones: using their vibrations, special devices restore the picture of a conversation. The use of electronic technology provides the special services of monopolies, as well as the intelligence services of states, with the opportunity to obtain the necessary information about the state of affairs of competitors, their negotiations, etc.

Another effective way of economic espionage is the introduction of an “insider” into government bodies designed to regulate the activities of industrial monopolies, which allows one to obtain the necessary information about competitors, control actions related to antimonopoly policy, etc.

Private ownership of inventions is established through patenting. From an economic point of view, patenting is tantamount to monopolizing the benefits associated with the use of a patent.

Basically, a patent provides real benefits for seven years, which allows its owner to receive considerable profit during this time. But on the other hand, the appearance of a patent, which prohibits the use of any patented discovery directly by competitors, forces them to accelerate the development of some new technical methods and technologies.

In addition, many major inventions are often not patented to avoid attracting the attention of competing companies. This most often refers to technology, technical processes that are difficult to copy, as opposed to creating new products.

The path from invention to commercial use requires large financial, labor and material costs. Therefore, if there is no danger that a competitor will not introduce the invention faster than the corporation itself, then the invention is not patented, but if there is a risk that the invention will be used by a competitor, it is immediately patented and the competitor is forced to wait 15-20 years until the monopoly right expires . The secrets of production of certain goods are not patented so that after a certain period the technology for their production is not made public. The presence of a patent serves as a powerful tool for control over the market, because its violation is punishable by confiscation of illegally produced products, compensation for losses and payment by the violator of large fines reaching $10 million. Patents are used primarily to protect a company's products from counterfeiting or imitation of quality goods.

For companies whose products are copied, counterfeits have catastrophic consequences: the sales market is sharply narrowed, profits are sharply reduced, going to the manufacturers of counterfeits. Counterfeits undermine the authority of the company, because In addition to being cheap, counterfeits are also of low quality, so counterfeits quickly break down, thereby worsening consumer confidence in the company whose brand was counterfeited.

3. The place and role of competition in a modern market economy

Since the model of perfect competition is a theoretical abstraction, all real-life markets are imperfect to one degree or another.

Imperfect competition is defined as follows:

· a market in which at least one of the signs of perfect competition is not observed;

· a characteristic of a market where two or more sellers, having some (limited) control over price, compete with each other for sales;

· markets in which either buyers or sellers take into account their ability to influence the market price.

Imperfect competition has always existed, but it became especially acute at the end of the 19th and beginning of the 20th centuries. in connection with the formation of monopolies. During this period, capital concentration occurs, joint-stock companies emerge, and control over natural, material and financial resources increases. Monopolization of the economy was a natural consequence of a large leap in the concentration of industrial production under the influence of scientific and technological progress. Professor P. Samuelson especially emphasizes this circumstance: “The economy of large-scale production may have certain factors inherent in it that lead to the monopolistic content of business organization. This is especially true in the rapidly changing field of technological development. It is clear that competition could not last long and be effective in the field of countless producers.”

Most cases of imperfect competition can be explained by two main reasons.

First, there is a trend toward fewer sellers in industries that have significant economies of scale and cost reductions. Under these conditions, large firms find it cheaper to produce, and they can sell their products at a lower price than small firms, which leads to the latter being “crowded out” of the industry.

Second, markets tend to be imperfectly competitive when it is difficult for new competitors to enter the industry. So-called “barriers to entry” may arise as a result of government regulations that limit the number of firms. In other cases, it may simply be too expensive for new competitors to break into the industry.

In theory, there are different types of markets with imperfect competition (in order of decreasing degree of competitiveness):

· monopolistic competition

· oligopoly

· monopoly

A monopolistic competition market consists of many buyers and sellers who transact not at a single market price, but over a wide range of prices. The presence of a price range is explained by the ability of sellers to offer buyers different product options. Sellers compete by offering a differentiated product in a market where new sellers may enter. Monopolistic competition is a type of industry market in which there are many sellers selling a differentiated product, which allows them to exercise some control over the selling price of the product. In a monopolistic competitive market, there are a relatively large number of sellers, each of whom satisfies a small share of the market demand for a common type of product sold by the firm and its competitors. In monopolistic competition, the market shares of firms average from 1 to 10% of total sales in a given market. Entry into this market is not hampered by such barriers as in a monopoly or oligopoly, but also not as easy as in perfect competition.

Real products may differ from each other in quality, properties, and appearance, but these differences, if any, are very insignificant. Differences may lie in the services accompanying the product. Buyers see differences in offerings and are willing to pay different prices for products. In order to stand out in something other than price, sellers strive to develop different offers for different market segments and widely use the practice of assigning brand names to products, advertising, and personal selling methods. Due to the presence of a large number of competitors, their marketing strategies have less influence on each individual company than in a monopoly market.

E. H. Chamberlin in his work “The Theory of Monopolistic Competition. Reorientation of the Theory of Value" very clearly emphasizes the peculiarity of monopolistic competition: "To say that each producer in an industry has a monopoly on his own variety of product does not mean to say that the industry is monopolized. On the contrary, there may be very intense competition within an industry, but, of course, not such as is described by theories of pure competition - it is distinguished by a monopoly on its own variety of product. ... Monopolistic competition is, of course, something different from both pure monopoly and pure competition.”

He drew attention to the fact that product differentiation leads to the fact that instead of a single market, a network of partially separate but interconnected markets is formed; there is a wide variety of prices, costs, and output volumes of a particular product group. Differentiation does not exclude a monopoly on a product. The power of monopoly, however, does not extend to the broader class of goods of which the monopolized product is a subset. Before E. Chamberlin, the term “monopolistic competition” was used in relation to the oligopolistic structure of the market, for example, by A. Pigou: “Monopolistic competition is competition between several sellers, each of which produces a significant share of the total output.”

Oligopoly market (oligopolistic competition) is a type of industrial market that is characterized by the presence of several very large firms that control a significant part of production and sales and compete with each other. Consists of a small number of sellers who are highly sensitive to each other's pricing policies and marketing strategies. Each company pursues an independent market policy, but at the same time it depends on competitors and is forced to take them into account. The product can be both differentiated and standard. Products can be similar (steel, aluminum), or they can be dissimilar (cars, personal computers). The small number of sellers is due to the fact that it is difficult for new entrants to penetrate this market. Each seller is sensitive to the strategy and actions of competitors. If a steel company cuts its prices by 10%, buyers will quickly switch to that supplier. Other steel producers will have to respond either by lowering prices or by offering more services. The oligopolist is never confident that he can achieve any long-term result by lowering prices. On the other hand, if the oligopolist raises prices, competitors may not follow suit, and then he will either have to return to previous prices or risk losing customers to competitors.

One type of oligopoly can be distinguished as an oligopoly with a dominant firm. It is characterized by the following symptoms:

· The presence of a dominant firm - an agent that sells or buys a significant share of the total market volume and is capable of strategic behavior;

· The presence of a large number of outsider firms, small-sized firms that produce the same or similar goods, but are not able to influence the market price;

· The market price is set under the strong influence of the dominant firm, outsiders accept it as given by the market;

Alvin J. Dolan and David E. Lindsay in The Market: A Microeconomic Model on oligopoly and oligopoly relationships: “The main difficulty in analyzing oligopoly is determining what constraints firms face in a market where there are several competing firms. Firms in oligopoly, as well as in perfect competition and monopolized markets, face constraints on the cost curve and demand conditions. But, in addition, they face another limitation: the actions of competing firms. The change in profit that a firm can receive by changing prices, output volumes, or quality characteristics of a product depends not only on the reaction of consumers (as in other market structures), but also on how other firms participating in the market react to this. The dependence of the behavior of each firm on the reaction of competitors is called an oligopolistic relationship. ... But an oligopolistic relationship can lead not only to fierce confrontation, but also to agreement. The latter occurs when oligopolistic firms see opportunities to jointly increase their income by raising prices and concluding an agreement to share the market. If the agreement is open and formal and involves all or most of the producers in the market, the result is the formation of a cartel.”

The following definitions of monopoly exist:

· a type of industry market in which there is a single seller of a product that has no close substitutes. The monopolist exercises control over the price and volume of output, which allows him to receive a monopoly profit. With a monopoly, there are prohibitively high barriers to entry into the industry. A monopoly position in the market can be ensured artificially: with the help of exclusive rights, patents and copyrights, ownership of all the most important sources of raw materials, unfair competition;

· exclusive right of production, fishing, trade and other activities belonging to one person, group of persons or state;

· a capitalist association that has seized the almost exclusive right to produce and sell a certain category of goods. The purpose of the association is to extract monopoly high profits. The advantage of monopolies over small producers is the ability to ensure a high level of concentration of production and capital, dictate prices, keep them at a high level, etc.

Depending on the scale of market coverage, there is a pure and absolute monopoly. A pure monopoly operates on the scale of one branch of market activity; an absolute monopoly covers the entire sphere of the national economy. If a pure monopoly is formed, as a rule, by a private person, then an absolute monopoly is in the hands of the state.

With a pure monopoly, there is only one seller in the market. This may be a government agency (such as the Post Office), a private regulated monopoly (such as Con-Edison in the USA), or a private unregulated monopoly (such as DuPont when it introduced nylon). In each individual case, pricing is different. A state monopoly can use price policy to achieve a variety of goals. It may set a price below cost if the product is important to buyers who are unable to purchase it at full price. The price may be set with the expectation of covering costs or generating good returns. Or it may be that the price is set very high to reduce consumption in every possible way. In the case of a regulated monopoly, the government allows the company to set prices that provide a “fair rate of return” that will enable the organization to maintain production and, if necessary, expand it. Conversely, in the case of an unregulated monopoly, the firm itself is free to set any price that the market will bear. And, nevertheless, for a number of reasons, companies do not always ask for the highest possible price - this includes a reluctance to attract competitors, and the desire to quickly penetrate the entire depth of the market thanks to low prices.

Let's take a succinct but succinct definition of a pure monopoly from Edwin J. Dolan and David E. Lindsay's The Market: A Microeconomic Model: “A monopoly is a situation in which there is only one seller of a good or service in the market.”

Based on the nature and reasons for their occurrence, monopolies are divided into natural, legal and artificial.

Natural monopoly - it is possessed by owners and organizations that own rare and irreproducible resources, as well as infrastructure sectors (public transport, etc.).

Legal monopolies formed on a legal basis (patents, etc.)

Natural monopolies cover rare goods, industries and types of production. These associations are formed regarding those objects regarding which it is unacceptable to develop competition. This usually includes railways, the country's defense complex, some types of transport and energy. As Stanlake noted, “competition between enterprises in these industries will only lead to duplication of costs for expensive capital equipment.” Therefore, it is necessary to create natural monopolies in these industries. It is possessed by owners and organizations that own rare and non-renewable resources, as well as by infrastructure sectors (public transport, etc.).

A natural monopoly is characterized by: