natural monopoly. Natural monopoly arises due to objective reasons

In economic theory, there are many different terms. However, the most capacious of them is that how correctly the use of this term and what its semantic meaning in a particular case depends directly on the context. This is due to different interpretations of this concept.

Essence of the term

The word "monopoly" in Greek means "mono" - one and "polio" - I sell. This term refers to a situation in the market when only one firm operates on it. At the same time, there is completely no competition or no one else produces similar goods or services.

The first monopolies in the history of mankind were created thanks to the sanctions of the state. The government passed laws giving a privileged right to any firm to trade in this or that product. However, the term "monopoly" has a lot of definitions. According to one version, this is a certain state of the market, when the state or organization is given the exclusive right to conduct economic activities on it. At the same time, in the absence of competition, the monopolist himself determines the cost of his product or very significantly influences the pricing policy. This definition of the term is a qualitative characteristic of the market.

The main features of a monopoly

Experts identify the following situations that indicate the presence of a single business firm:

• presence of one or very large seller;
• availability of products that have no competitive analogues;
• the existence of high threshold criteria for the entry of new enterprises into a similar market segment.

There are other interpretations applied to the term "monopoly". For example, this concept can mean a separate company, which is characterized by a priority in the management of a certain market segment.

Interpretation options

The term "monopoly" is understood as:

• the state of either the market or one of its segments, in which there is only one player;
• the only firm that produces and sells the goods it has created;
• market with a single leader present on it.

The uniqueness of a company is determined by many criteria. However, the most important of them is the level of competition. It should either be low enough or absent altogether.

Classification

There are different types of monopolies. However, their classification is highly arbitrary. This is explained by the fact that some forms of monopolies can simultaneously belong to several of their types. So, distinguish:

• natural monopoly, when an economic entity occupies a privileged position in the market;
• pure monopoly, when there is a single supplier of a certain product or product;
• conglomerate - these are several entities of a heterogeneous type, but mutually financially integrated (an example in Russia is ZAO Gazmetall);
• a closed monopoly that has protection from competition in the form of legal restrictions, patents and copyrights;
• open monopoly, which is characterized by the fact that there is a single supplier of the product in the market that does not have special protection from competition.

In addition to the above, there are other types of monopolies. Consider some of the types of this phenomenon.

natural monopoly

Quite often, a situation arises in the market when the demand for a particular product is satisfied by one or more companies. In this case, a natural monopoly arises. Its reasons lie in the peculiarities of customer service and the technological process.

In any state of our planet there are natural monopolies. Examples of this are telephone services, energy supply, transport, etc.

Natural monopolies also work in the field of:

• transportation of oil products, gas and oil through main pipelines;
• services to provide the population with public postal and electrical communications.

Take, for example, the power industry. There is also a natural monopoly here. Examples in Russia are the 700 existing CHPPs, GRES and HPPs, which were merged into RAO "UES of Russia". The company was founded in 1992, when fifty of the newest power plants were withdrawn from the AO-Energos under territorial control. Today, RAO "UES of Russia" owns the entire network of power lines in the country.

The natural monopoly also did not bypass the gas industry. Examples in Russia are eight associations for as well as thirteen transport regional enterprises for its transportation, united in RAO Gazprom. The share of this company accounts for a quarter of all revenues to the state budget.

JSC "Gazprom" carries out 56% of deliveries to Eastern and 21% - to Western Europe. He also has assets abroad, which are shares in companies that own gas distribution and gas transmission systems.

The natural monopoly in Russia is the railway industry. The share of the track facilities of Russian Railways, as well as freight turnover, is 80% of all transportation in the country. The share of passenger traffic is also large. It is 41%.

There are other natural monopolies in Russia. Examples of this are OJSC Rosneft, OJSC Rostelecom, etc.

Examples of monopoly in the natural world are somewhat different from Russian ones. In the legislative acts of Western countries, such terms are used as:

• public service;
• service needed by all;
• network service, etc. .

Thus, in the UK there is no legal fixing of the term "natural monopolies". Examples of societies that are "needed by all" concern railway structures, transmission and distribution of electricity, water supply and sewerage. And in France, the term "natural monopolies" is enshrined in the concept of "commercial and industrial public services." These are organizations working in the field of communications, rail transportation and electricity supply.

A natural monopoly in Germany is a situation where one company is able to satisfy the demand in the market by providing a product or service at a low price, but at the same time providing a normal level of profitability. This applies to pipeline and rail transport.

artificial monopoly

This concept is very capacious. According to some experts, the natural monopoly described above is one of the subspecies of the economic (artificial) monopoly. In this case, we are talking about companies that have been able to win a leading position in the market.

How does an artificial monopoly arise? Examples of the emergence of dominant enterprises indicate the likelihood of two ways to achieve the goal. The first of these lies in the successful development of production, as well as in the concentration of capital, and, as a result, in the increase in the scale of activities. The second way is faster. Its basis is the centralization of capital, that is, the voluntary merger or absorption of bankrupt organizations. At the same time, a lot of small and medium-sized enterprises are turning into larger ones. There is an artificial monopoly. It covers a certain segment of the sales market and has no competitors.

At present, artificial monopolies are widespread. Examples of such associations are concerns, trusts, syndicates and cartels. Every entrepreneur strives to win a monopoly position. It allows you to eliminate a number of risks and problems associated with competitors, as well as to take a privileged position in the market. At the same time, the monopolist is able to influence other market participants and impose its conditions on them.

The creation of an artificial monopoly can occur in another way. The state, by its legislative acts, is able to grant the right to produce products or provide services to only one enterprise. This also creates artificial monopolies. There are examples of this in most countries of the world. These are organizations based on state preferences. An example in Russia is Mosgortrans. It provides the capital with land transport. At the same time, the authorities do not give permission to work on the market to other carriers, its competitors.

State monopoly

Its creation is carried out with the help of legislative barriers. Legal documents define the commodity boundaries of a monopoly entity and forms of control over it. At the same time, some companies are granted the exclusive right to carry out a particular type of activity. These organizations are public. They are subordinate to the central administrations, ministries, etc. The state monopoly groups enterprises of the same industry. This leads to a lack of competition in the sales market.

They exist in Russia. Examples of activities regulated by legislative acts are given below. They include:

• activities related to the circulation of psychotropic and narcotic drugs;
• work in the field of military-technical regulation;
• issue of cash and organization of their circulation on the territory of Russia;
• hallmarking and approbation of articles made of precious metals;
• production and turnover of ethyl alcohol;
• export and import of individual goods.

Where is the state monopoly most clearly manifested? Examples of the use of administrative power can be seen in various areas. This is the Bank of Russia. It has a monopoly on the organization, circulation and issue of cash. This right is given to him by legislative acts.

There is also a state monopoly in the field of healthcare. Examples relate to the production of medicines. So, the Federal State Unitary Enterprise "Moscow Endocrine Plant" has monopoly rights. It produces drugs that are used in various areas of healthcare. These are psychiatry and gynecology, endocrinology and ophthalmology.

The space industry also has a state monopoly. In Russia, examples relate to various objects in this area, the most striking of them is the Baikonur Cosmodrome.

Pure monopoly

Sometimes a situation arises in the market when a new company appears in the consumer sector, offering a newly created product that has no analogues. This is pure monopoly. There are currently few examples of such situations. Today this phenomenon is quite rare. More often than not, several firms compete with each other. At present, as a rule, only with the support of the state can a pure monopoly exist. In this case, examples can only be given for entities offering their products on local markets. The simplest of them is when the company dictates its price to consumers. However, the cost of services or goods of pure monopolies may be under the control of the state. At the same time, such business entities will be protected from entry into the scope of their activities by other sellers by state legislative acts.

A typical example of a pure monopoly is the activity of the Aluminum Company (USA). In 1945, this company completely controlled bauxite mining in America. It is the main raw material for aluminum production.

A vivid example of a pure monopoly in Russia is local firms for electricity and gas supply to settlements. In addition, these are companies that maintain water networks. Utilities are the most successful examples of such business entities around the world.

open monopoly

A situation may arise in the market when a company launches a completely new product. But unlike a pure monopoly, the state does not protect it from possible competitors. In this case, an open monopoly arises, which can be attributed to one of the types of pure monopoly. For a period of time, the firm is the sole supplier of the new product. Competitors of such companies appear on the market a little later.

If we give examples of an open monopoly, then it is worth remembering Apple, which was the first to offer touch technology to the consumer.

Bilateral monopolies

Sometimes a situation arises in the market when a product is offered by a single seller, and demand exists from a single buyer. This is a bilateral monopoly. In such a situation, the buyer and seller know each other. At the same time, they carry out the purchase and sale of finished products under strict price control. Examples of a bilateral monopoly relate to situations where a firm sells its product to the state. This is the purchase of weapons by the Ministry of Defense, and the opposition of a single trade union to any one employer.

Conclusion

The classification of monopolies is conditional. Some companies are very difficult to attribute to a particular type of business entity. Many of them belong to several types of different monopolies at once. Business entities servicing telephone networks can serve as an example of this. This includes gas and electricity companies. All of them have signs of not only natural, but also closed monopoly. Examples may apply to other areas of activity.

However, the position of a business entity often changes dramatically. Thus, the existing advantages of natural monopolies are not their integral part. The market position of such business entities may change as competitors develop the latest technologies. The position of closed monopolies is not stable either. All benefits and privileges given to them can be canceled by newly introduced legislative acts.

NATURAL MONOPOLY, a special market structure in which it is economically feasible to have a single enterprise that provides the entire market with a specific product (service); a pure monopoly in which the minimum efficient size of production is greater than the existing demand for its products. For example, the transportation of gas through pipelines can be called a natural monopoly; services for the transmission of electrical and thermal energy; rail transportation; services of transport terminals, ports, airports; public postal services.

Natural monopoly is characterized by: strong vertical integration; inelasticity of demand for goods (services) in the absence of substitute goods; high barriers to entry into the industry and high sunk costs; long payback period of investments; physical restrictions of the environment, limiting the number of companies in one territory.

Strong vertical integration is due to the fact that a natural monopoly ensures the functioning of the entire industry. For example, Russian Railways OJSC (RZD OJSC) includes not only a dense network of railways, but also railway stations, marshalling yards, rolling stock, repair depots, transport interchanges, a ticketing system, freight traffic regulation, etc. .

The inelasticity of demand for goods (services) in the absence of substitute goods means that in some cases it is rather difficult to find an adequate replacement for the products of a natural monopoly. For example, in a number of industries it is impossible to avoid the formation of monopolies. You cannot have two gas pipelines from two competing companies in your apartment, several heat transmission lines, alternative sources of electricity, etc. In most infrastructure sectors, the formation of monopolies occurs naturally, and the state is forced to regulate them directly or indirectly.

High barriers to entry into the industry and high sunk costs are due to the fact that it is impossible to create an alternative system, for example, rail transportation, in a short time (railroads began to be built in Russia since 1837 and have continued to improve since then). In addition, often the physical limitations of the environment do not allow the creation of a duplicate company in the same territory.

The long payback period of investments is due to the fact that objects of natural monopoly (for example, facilities for the transmission of electrical and thermal energy) have been created for decades.

There are traditional and modern mechanisms for regulating natural monopoly. The traditional mechanisms include: the rate of return on capital, the rate of return depending on the volume of output, on the volume of sales (income), on costs. However, all these methods do not help reduce costs, but, on the contrary, objectively lead to an increase in the cost of capital of natural monopolies and the capital intensity of production. Therefore, in the 1970s and 1980s, models of incentive regulation of natural monopolies were widely developed.

The goals of incentive regulation are: minimization of costs associated with the regulation process; the introduction of competition as a means of increasing efficiency; creating incentives for the regulated firm to reduce costs. Their implementation contributes to the efficient use of resources, available capacities, and encourages firms to innovate. Among the models of incentive regulation are the following.

price limits. Their essence is to set a fixed ceiling on the price set by the regulated firm. The purpose of this operation is to force the firm to cut costs. For example, in its operations, the American Telephone and Telegraph Company establishes three baskets of services: one for individual consumers and two for companies and businesses. At the same time, the price limit is indexed in accordance with the growth rate of GNP, minus 3% (which is the average growth rate of labor productivity in the United States).

"Yardstick" competition. This method is used to organize the regulation of water supply and electricity in the UK, where such companies are regional monopolies. Estimates based on the level of costs of other firms operating in similar conditions are used as a constraint. However, there is a problem of comparability.

Profit sharing schemes. This method encourages companies to increase the rate of return. However, it is beneficial for the state that the rate of profit does not exceed certain limits. Let's take as an example the electric power industry of the state of Indiana (USA); if the company's income does not exceed 10.6%, the company receives them; if the rate of return is more than 12.3%, then the company must lower prices and the benefits go to consumers. Revenues (ranging from 10.6 to 12.3%) are shared between the company and consumers.

Selectable rates. The firm must provide a certain set of services at regulated prices. However, it may itself offer the consumer an alternative tariff structure.

hybrid mechanisms. They may use the previous forms in certain combinations; for example, telecommunications regulation and gas transportation in the US in the early 1990s. The company sets an overall income limit, indexes rates, and reprices rates based on costs. The advantage of hybrid mechanisms is greater flexibility in terms of prices.

Since the mid-1980s, the liberalization of the reform of natural monopoly regulation in the United States and Canada began. There have been privatizations and measures taken to increase competition in the UK, New Zealand and Australia. There are two fundamentally different systems in the world.

In Eastern and Western Europe, gas pipelines are state-owned enterprises with a transport monopoly, they are included and integrated into the activities of the gas company. This practice exists in Italy, France, Belgium, the Netherlands, Denmark, Poland, Bulgaria and Romania.

In North America, on the contrary, main gas pipelines are the property of private or joint companies. They are managed independently of sellers and buyers, even in cases where they are owned by one or the other.

Open access to a natural monopoly (in countries such as the US, Canada, UK) stimulates competition, as it gives any third party the right to purchase a transport service. The introduction of open access is possible on the basis of isolating the gas pipeline into a separate transport company. At the same time, it is necessary to separate two levels: the separation of transport functions from the functions of the trader; separation of services related to transportation from storage, brokerage, etc.

transport tariff. In countries where the gas producer owns the entire vertical gas chain (including gas pipelines) and has a dominant monopoly company (Italy, Belgium, the Netherlands, France), a separate transmission tariff does not apply. On the contrary, in countries where gas monopolies have been privatized (Great Britain) or where main gas pipelines are in the hands of private or joint-stock companies (USA, Canada), the issue of the transport tariff is a key one. Incentive regulation is also widely used (price limits, profit sharing schemes, etc.).

Reforming a natural monopoly is a lengthy and complex process. Even the most successful reform of the vertically integrated British Gas monopoly took 10 years.

In Russia, the Basic Provisions for Structural Reform in the Spheres of Natural Monopolies, approved by the Decree of the President of the Russian Federation dated 28.4.1997, provides for strengthening state regulation in the field of transportation, stimulating competition in potentially competitive types of economic activity and weakening regulation in them, developing contractual relations between suppliers and consumers. Examples of a natural monopoly are RAO UES, Gazprom, JSC Russian Railways.

Lit. : Temporary Regulations on the Register of subjects of natural monopolies, in respect of which state regulation and control are carried out, dated August 26, 2004 No. 59 // Rossiyskaya Gazeta. 2004. September 22; Antimonopoly regulation of vertical restrictive contracts: Russian practice in the context of world experience / Edited by S. B. Avdasheva. M., 2004.

At the present stage of economic development, there is the concept of "natural monopoly" - as an exclusive right granted by the state to an enterprise, organization or individual to carry out any activity.

Government commissions retain the right to regulate the activities of such monopolies and determine prices (tariffs) for their products. In view of restraining the growth of prices for certain goods and services of natural monopolies, the state is forced, if necessary, to allocate subsidies to producers, which make it possible to cover the loss.

Natural monopolies can be commercial and non-commercial organizations engaged in the production or sale of goods or services. A natural monopoly arises and exists for objective reasons in industries where only large-scale production can exist, which helps to reduce costs, increase efficiency, and reduce prices (energy, water supply, gas supply, urban subway, communications, etc.).

These organizations, using the technological features of production, can produce goods or services that currently have no substitutes and, as a result, have a stable demand with a slight change in price.

At the same time, a natural monopoly is characteristic of the extraction of rare minerals or the production of certain goods in natural conditions that are especially favorable for this (mineral genus, special varieties of tea, grapes, etc.). The government reserves the right to regulate the activities of such monopolies, prices (tariffs) for the products of natural monopolies are determined by government regulatory commissions. The state pursues a policy of price containment for certain goods and services produced by natural monopolies. To cover the possible loss of producers, the state provides them with the necessary subsidies. The creation of a competitive environment in the market, regardless of the level of demand, under the conditions of a natural monopoly is impossible or economically inefficient at the achieved level of development of science and technology.

Under pure monopoly, the industry consists of one firm (the glucose plant). At first glance, such a situation is unrealistic and, indeed, is very rare across the country. However, if we take a more modest scale, for example, a small city, we will see that the situation of pure monopoly is quite typical. In such a city there is one power plant, one railroad, one airport, one bank, one large enterprise, one bookstore, and so on.

Pure monopoly usually arises where there are no real alternatives, there are no close substitutes, the product being produced is to a certain extent unique. This can be fully attributed to natural monopolies, when an increase in the number of firms in an industry causes an increase in average costs. A typical example of a natural monopoly is provided by municipal utilities. Under these conditions, the monopolist has real power over the product, controls the price to a certain extent and can influence it by changing the quantity of goods.

A monopoly occurs where there are high barriers to entry into an industry. This may be due to economies of scale (as in the automotive and steel industries), with natural monopoly(when any companies: in the field of mail, communications, gas and water supply - consolidate their monopoly position, receiving privileges from the government).

A monopoly may be based on the exclusive right to some resource, such as natural factors of production.

A firm can be called a pure monopolist if it is the only producer of an economic good that has no close substitutes (substitutes) and is shielded from direct competition by high barriers to entry into the industry.

A monopoly in the economy is an industry in which, for some reason, there is no competition. It may be limited by law through a legal act or a patent, competition may be absent in a new industry with only one manufacturer.

However, there is a very special kind: a natural monopoly is an industry that needs the maximum number of consumers and that uses unique natural resources. If a conventional monopoly limits the creation of a free market, then a natural one is the most profitable option for the existence of this industry.

Types of monopolies: schematically

Speaking in the language of economic science, a natural monopoly is a state of the market when its maximum efficiency is possible only in the absence of competition. which are produced in these industries, cannot be replaced by any analogues, and the demand for them is maximally inelastic.

Even if the price of products of natural monopolies is significantly increased, demand will remain the same, and buyers will start saving on the purchase of goods from other groups. A natural monopoly in an industry is possible only if the costs of producing goods by one firm are lower than if two organizations were involved in this business. If the number of producers increases, the volume of production for each of them will become less, and the costs will only increase.

In Russia, as in other countries, today there are several industries in which a situation of natural monopoly has formed:

• Transportation of oil and oil products, as well as natural gas through main pipelines. The operation of such a transport network will be as efficient and profitable as possible if only one company is involved in this.
• Rail transportation. An example of a natural monopoly in Russia is the Russian Railways company - this is the only enterprise engaged in rail transportation, it also owns the entire transport network throughout Russia.
• Electricity and heat energy transportation services. Similarly, in this industry, no organization can become a serious competitor to monopolists.
• Operation of transport terminals: airports, sea and river ports, etc.
• Services of water supply of cities, maintenance of work of municipal networks. The appointment of payment for utilities is under the constant control of the state, tariffs are formed taking into account a number of factors. At the same time, the end consumer has no alternative, he has to pay for water supply, sewerage, heat supply and other services at prescribed rates, and he cannot switch to another supplier.
• . In Russia, the FSUE Russian Post is a natural monopoly in the postal service and mail forwarding industry. Although there are several regional operators operating in the country, their share in the total number of services provided has been less than 1% for more than 10 years, and no changes are expected in the near future.

All industries listed are exclusive and not subject to antitrust laws. This is due to the fact that they are designed to protect the industry from low-quality competition, and in all cases their activities are regulated and controlled by the state.

The main features of a monopoly in the economy

Natural monopoly goods are indispensable

Any monopoly in the economy has a number of specific features that distinguish it from all types of competition and explain its special position in the market. Monopoly can be natural or artificial, but in any case it must meet several special criteria:

• The existence of only one company supplying goods or services to the market. This company can be formed with large investments of capital over a long period of time, such as, for example, the railway network in Russia. Naturally, no new organization will be able to invest as much to become stronger than a monopolist and quickly cover all costs.
• The product or service is so specific that there are no analogues for it. The consumer can only agree to the conditions set by the monopolist or even refuse the good he offers. The monopolist has the ability to set its own price.
• In a competitive environment, the price is formed by matching supply and demand, so it changes quickly. A monopoly company can dictate its terms at any time; in natural monopolies, the state plays an important role in pricing. The monopolist himself controls the entire volume of services or goods provided in this industry. That is, he forms not only the price, but also the offer, adjusting their ratio at his own discretion.

Reasons for the formation of artificial and natural monopoly

The concept of natural monopoly appeared in ancient times.

Such a form of industry organization as a monopoly has existed for a very long time, the term itself appeared in ancient times. The very first organizations arose as a result of the combined efforts of several manufacturers who captured the entire market and could independently set prices at their discretion.

Almost all civilized countries today have antimonopoly laws that regulate the situation on the market and prevent the capture of an entire industry by one company. However, it is necessary to distinguish between an artificial monopoly, which is the result of an agreement between manufacturers and a combination of companies, and a natural one, arising for objective reasons.

Not only will it not hinder the development of the economy, but it is also a more profitable and efficient form of existence for it. The situation of natural monopoly is formed for several reasons:

• One firm produces a product or service at a lower average cost due to increased output. This allows you to reduce the price of the final product, and for the end user, this situation is much more profitable. An example is the city subway system or railways: if two carriers operate in the same direction, the income of each of them will be half as much, and because of this, the fare will have to be doubled.
• The difficulty of entering the market of a new enterprise with a similar offer. For example, in order to introduce one more enterprise dealing with the water supply of the city, it will be necessary to lay an additional water supply network. This is not only extremely costly, but also useless, since the profit received, even in the distant future, will not pay off the investment.
• Limited market demand. The product of some suppliers is so specific that more than one manufacturer is enough for it. If there are more of them, the total profit will remain the same. An example is the production of military equipment or nuclear icebreakers: the demand for such products is completely dependent on the state, and in this industry a larger number of manufacturers simply will not survive.
• A natural monopoly is as stable as possible: if an artificial monopoly association can eventually break up into several competing firms, then the natural monopoly industry will remain unchanged for a very long time. A turning point in its work can only occur when new technological solutions appear or a sharp change in market demand.

An example of how a natural monopoly works

Natural monopoly is protected by the state

Consider the principle of operation of the Russian Railways company, one of the largest monopoly organizations in Russia. Today it is the only seller that provides the possibility of transporting goods and passengers by rail.

Even if another company acquires its own locomotives, it will be forced to use the existing transport network and coordinate its every action with Russian Railways.

The organization itself includes numerous subsidiaries, making it completely independent. These are their own design institutes, repair plants, trade organizations and much more, which should ensure the life of a giant company. Due to the sheer scale of competition in this industry, there is not and is not expected.

At the same time, the uniqueness of the services offered today remains controversial, since in addition to the railway one can use road, air and water transport. However, rail transportation is the most reliable and safest, in addition, it makes it possible to transport large consignments of goods, which means that they also do not have a full-fledged alternative. Other companies are closed to this market due to the huge costs of building their own transport network.

The position of monopoly is protected by the state, which is the sole shareholder of the company and fully controls its management.

The Russian Railways organization independently forms prices, and they are little dependent on fluctuations in demand. Based on all these signs, it can be confidently stated that the Russian Railways company is a natural monopoly in its field, and at the moment this is the most profitable option for the consumer in this industry.

A natural monopoly is a position in the market that does not hinder the development of an industry, but, on the contrary, makes it more profitable and efficient. The existence of such monopolies depends on a number of factors, and their appearance is due to natural objective reasons.

Natural monopolies: nationalization cannot be privatized - the topic of the video:

Monopoly is the exclusive right to conduct any activity in a certain area of ​​the state, organization, firm. The term "monopoly" comes from the Greek language (monos - one, only; poleo - seller). Monopoly literally means "one seller". In this case, all trade in one product or service is in one hand. Nevertheless, when analyzing this phenomenon, it is worth considering the ambiguity of the term "monopoly", since in reality it is very difficult to find a situation where there would be a single producer of goods on the market that do not have substitute goods - substitutes. Therefore, when using the term "monopoly" there is always a certain amount of conventionality.

In the literature, mainly economics, there are many different points of view regarding monopoly. Representatives of the system (structural) approach define a monopoly as an exclusive (monopoly) position in which an economic entity is located in the commodity market. The exclusivity of this provision lies in the fact that this entity concentrates the bulk of the production and marketing of a particular product or service. Ultimately, this allows him (the subject) to exercise actual control over consumers and other participants in market relations.

Supporters of the behavioral approach consider a monopoly as a special behavior of a subject dominating the market to use its position in its own interests.

Representatives of the role (functional) approach emphasize the negative consequences of the monopolization of a particular sphere of management. They believe that monopoly leads to an unfair redistribution of income from consumers to the monopoly firm by setting very high prices. One of the main representatives of this approach was the economist A. Smith.

There is no definition of "monopoly" in the antimonopoly legislation. However, there are also approximate concepts: “dominant position”, “monopolistic activity”, “natural monopoly”.

By virtue of Art. 3 of the Federal Law of August 17, 1995 No. 147-FZ (as amended on December 29, 2006 No. 258-FZ) “On Natural Monopolies”, a natural monopoly is characterized as a state of the commodity market. Since natural monopoly is one of the types of monopoly, it means that monopoly in general is a state of the commodity market.

In principle, a monopoly can be viewed as a large corporation that occupies a leading position in any branch of the national economy. That is, a situation arises in the market when buyers are confronted by an entrepreneur - a monopolist who produces the bulk of products of a certain type. In this case, even a small enterprise can become a monopolist.

The lack of competition that characterizes a monopoly can be largely explained in terms of barriers to entry into a particular industry. In the case of a monopoly, these barriers will be high enough to completely block all possible competition. The real barriers that will prevent a firm from entering the industry include:

* scale effect. This means that in conditions of large-scale production, due to the monopolization of the market, efficient production with low costs is achieved. The dominant firm in this situation is able to lower the price of products slightly for a certain time in order to eliminate competitors;

* exclusive rights. In a number of countries around the world, the government may give firms special rights, for example, granting the firm the status of a sole seller. However, in exchange for a privilege of this kind, the government may retain the right to partially regulate the activities of such monopolies;

* patents and licenses. The state must guarantee patent protection for new products and production technologies. For a certain period of time, this can provide firms with their exclusive rights, as well as consolidate their leading positions in the market;

* ownership of the most important types of raw materials. Some companies are monopolists, due to absolute ownership of the sources of production resource, which is necessary for the production of a monopoly product.

Monopolies exercise control over industries, markets and the economy as a whole on the basis of a high degree of concentration of production and capital in order to establish monopoly prices and maximize profits. The dominant position in the economy is the basis of the impact that monopolies have on all spheres of life in a given state. In the field of economic relations, the capitalist growth of the monopolies led to the growth of their dictate and domination. Perfect competition and "pure" absolute monopoly are theoretical abstractions expressing two polar situations in the market, two logical limits. "... monopolies are the exact opposite of free competition ..." (V.I. Lenin).

Due to the high level of concentration of economic resources, monopolies are able to create opportunities for accelerating scientific and technological progress. However, these opportunities will be realized only in those cases when such an acceleration will help the firm in order to extract monopoly-high profits. Some economists, notably Joseph Schumpeter, have tried to argue that large enterprises with significant power are a positive development in a country's economy, as they are catalysts for technical change, since firms with monopoly power can spend part of their income on research in order to to protect or consolidate their monopoly power. By engaging in research, they will provide benefits not only to themselves, but to society as a whole. Unfortunately, there is very little convincing evidence that monopolies play a particularly important role in accelerating technological progress. This is largely due to the fact that monopolies can delay the development of scientific and technological progress if there is any threat to their profit from it.

Paying attention to monopolistic formations in industrial production, we can notice that these are separate large enterprises or associations of enterprises that produce a significant amount of a certain type of product, as a result of which they get the opportunity to influence the pricing process, achieving the greatest benefits for themselves. As a consequence, such enterprises receive higher (monopoly) profits. Therefore, we can say that the main sign of monopoly formation is the occupation of a dominant position, which gives the company the opportunity to independently or together with other entrepreneurs to limit competition in the market for a particular product. A monopoly position is desirable for every entrepreneur or enterprise, as it helps to avoid a number of problems and risks associated with competition. It allows the company to take a privileged position in the market, concentrating certain economic power in its hands, and also to influence other market participants, in fact dictating its terms to them.

In the literature, as a rule, the following three types of monopolies are distinguished:

1) a closed (legal) monopoly that is protected from competition by legal restrictions (for example, a state monopoly);

2) a natural monopoly is a branch of the economy where the entire market will be controlled by one economic entity (for example, rail transportation);

3) an open (temporary) monopoly, in which this entity temporarily becomes the sole supplier of goods, and its competitors may appear on the same market later.

Monopolies can be classified according to other criteria. For example, depending on the nature of the origin, administrative, economic and natural monopolies can be distinguished.

Administrative monopoly arises in connection with the activities of state bodies. On the one hand, this is the granting of exclusive rights to firms to perform a certain type of activity. On the other hand, these are organizational structures for state-owned enterprises in a situation where they unite and report to different ministries and associations. Here, enterprises of the same industry are usually grouped, acting on the market as one economic entity, therefore, there is no competition between them.

Economic monopoly is the most common. Its appearance is due to economic reasons, it develops on the basis of the laws of economic development. We are talking about entrepreneurs who have managed to win a monopoly position in the market. There are two ways leading to the emergence of an economic monopoly. The first is the successful development of the enterprise, the constant increase in its scale through the concentration of capital, while the second is based on the processes of centralization of capital.

Let us dwell on natural monopolies in more detail. As already mentioned, the status of natural monopolies is regulated by the Law on Monopolies. A natural monopoly operates under conditions in which the formation of a competitive environment in the market is impossible or economically inefficient at a given level of scientific and technical progress.

There is a list of areas of activity in which the exclusive regime of natural monopoly operates:

1) transportation of oil and oil products;

2) gas transportation; railway transportation;

3) services of transport terminals, ports, airports;

4) electric and postal communication services;

5) electricity transmission services;

6) services for operational dispatch control in the electric power industry;

7) services for the transfer of heat energy.

A natural monopoly can be characterized as a type of monopoly that occupies a privileged position in the market due to the technological features of production (for example, due to the exclusive possession of the resources necessary for production, extremely high cost or exclusivity of the material and technical base). This, as a rule, is an extremely costly production with the sole possession of the necessary resources, exceptional technologies and productive capacities. Basically, natural monopolies have labor-intensive infrastructures, the re-creation of which by other enterprises is economically unjustified or technically impossible. This is the industry in which long-run average cost is minimal when only one firm serves the entire market. A natural monopoly can operate due to barriers to entry by competitors, government privileges, or limited information, it has large increasing returns to scale, and production costs are much lower compared to perfect competition or an oligopoly. A natural monopoly is based on features of technology that reflect the natural laws of nature, and not on property rights or government licenses. Forced allocation of production to several enterprises would be inefficient, as it would lead to an increase in production costs.

There are many definitions of natural monopoly. We will focus on two in order to characterize this concept in more detail.

A natural monopoly is a sphere of production or branch of the national economy, the nature of production in which provides such high economies of scale that a product (service) can be produced by one enterprise at a lower cost than if many enterprises would be engaged in its manufacture.

A natural monopoly is a market condition in which a certain kind of product (service) or a series of them is produced by only one seller due to the fact that the presence of two or more sellers in this market representing a similar product is impossible or economically (socially) unjustified for reasons objective (natural) nature. It is based on the features of production technologies and customer service. The emergence of natural monopolies can be explained by a special effect associated with the scale of production - the effect of saving resources as a result of the consolidation of production. It cannot be denied that large-scale production has some advantage over small-scale production when comparing costs when production is homogeneous. Thanks to better technical equipment and greater capacity of a large enterprise, there is an increase in labor productivity, and consequently, a decrease in costs per unit of output. And this accordingly means more efficient use of resources. Therefore, natural monopolies are becoming a desirable phenomenon for society and the state, although the monopolistic nature still forces them to regulate their activities.

There are two types of natural monopolies:

a) Natural monopolies. The emergence of monopolies of this type occurs, as a rule, due to barriers to competition erected by nature itself. For example, a monopolist may be a firm that has discovered a deposit of unique minerals and, accordingly, bought the rights to the site on which this deposit is located. Since the law protects the rights of the owner, no one else will be able to use this deposit. However, this does not exclude the regulatory intervention of the state in the activities of such an enterprise.

b) Techno-economic monopolies. This can be conditionally called monopolies, the emergence of which is dictated either by technical or economic reasons associated with the manifestation of economies of scale. For example, it is extremely irrational to create two networks of sewerage, gas supply or electricity in an apartment in one city. It is not always rational to try to lay cables of two competing telephone companies in the same city, because they would still have to constantly turn to each other's services in a situation where a subscriber of one network would call a subscriber of another.

The largest monopolies are usually energy and transport monopolies, where economies of scale especially push firms to grow in order to reduce average production costs. In reality, this is manifested in the fact that the creation in such industries, instead of one large monopoly firm, of several smaller firms, leads to an increase in production costs and, as a result, not to a decrease, but to an increase in prices. And society, of course, is not interested in this.

C. Fisher gives the following characteristic of a natural monopoly. If the production of any volume of output by one firm is cheaper than its production by two or more firms, then the industry is a natural monopoly. In almost all countries, a natural monopoly is classified as a public utility, that is, one without which the functioning of the infrastructure of an entire state is impossible.

The modern theory of natural monopoly has been developing in the last few decades in the West. In principle, the theory of natural monopoly can be considered as an integral part of a more general theory of the organization of production and analysis of the structure of industries. When using foreign experience, it is worth considering the additional difficulties associated with transition processes in the Russian economy. We should also not forget about the special genesis of Russian monopolies, which were formed not in a competitive environment, but formed administratively in a centrally controlled system. Therefore, it is quite understandable that for the domestic economy the problem of natural monopolies as an element of the market, until relatively recently, was not particularly relevant. And it is not surprising that the Russian law on natural monopolies also indicates a significant decrease in production costs per unit of goods as the volume of production increases as a defining feature of this phenomenon.

Following the theory, the state of the industry market can be attributed to a natural monopoly only in such a situation when the amount of total costs, which is calculated with the optimal use of resources, is minimal with a structure consisting of a single enterprise. Then the question arises before us, why is competition unacceptable in natural monopolies? It is obvious that it is very costly for society to have several firms that will supply domestic and industrial facilities within the same region with electricity or water, since operations on types of products require significant fixed costs for generators, pumping and treatment equipment, water pipes, etc. .d. It turns out that even if such firms can afford to incur costs of this magnitude, they still will not be covered by income from production, because the presence of several suppliers of water or electricity divides the industry into spheres of influence of individual enterprises and thereby limits the equity participation of each firm . Under these conditions, an individual firm will not fully utilize its permanent equipment, with the result that electricity and water tariffs will become very high. For greater clarity, we can imagine a situation where several firms operate in the industry, while all of them are in an equal position, and there is fierce competition between individual firms both in the acquisition of means of production and in the sphere of marketing. As a result of competition between firms, weaker firms will go bankrupt, and stronger ones, in order to withstand further competition, merge, forming a pure monopoly. As it develops and improves, a pure monopoly can quickly make up for past losses by exploiting its monopoly position in the market by charging very high prices for its goods and services. In general, a pure monopoly can exist and develop successfully without causing any harm to the industry. An example of such monopolies may be monopolies in the automotive industry or in the production of household goods. However, in an industry that is extremely necessary for the population of the region, a pure monopoly is not only ineffective, but also has negative effects. Therefore, in order to prevent the formation of a pure monopoly in industries such as water supply or electricity, the government usually grants an exclusive privilege to one firm to supply, for example, water or natural gas. For its part, the government determines the geographic scope of the monopolist, regulates the quality of its services, and controls the prices it can charge. Thus, a regulated or state-organized monopoly arises.