In economic theory, there are many different terms. However, the most capacious of them is the concept of monopoly. How correct the use of this term is and what is its semantic meaning in a particular case depends directly on the context. This is due to the different interpretation of this concept.
The essence of the term
The word "monopoly" in Greek means "mono" - one and "polio" - for sale. This term means a situation in the market when only one company acts 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 state sanctions. The government passed laws giving the privileged right of any company to trade in a particular 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 business on it. At the same time, in the absence of competition, the monopolist himself determines the value of his product or very significantly affects the pricing policy. Such a definition of the term is a qualitative characteristic of the market.
The main signs of monopoly
Experts identify the following situations that indicate the presence of a single business company:
- the presence of one or a very large seller;
- the presence of products that do not have competitive analogues;
- the existence of high threshold criteria for new enterprises to enter a similar market segment.
There are other interpretations that apply to the term "monopoly". For example, this concept can mean a separate company, which is characterized by priority in managing 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 company that produces and sells the goods it creates;
- a market with the only leading enterprise present.
The uniqueness of a company is determined by many criteria. However, the most basic of them is the level of competition. It should be either low enough or absent altogether.
Classification
There are various types of monopolies. However, their classification is very conditional. This is due to the fact that some forms of monopolies can simultaneously belong to several of their types. So, allocate:
- natural monopoly when an economic entity occupies a privileged position in the market;
- pure monopoly when there is a single supplier of a certain type of service or goods;
- conglomerate - these are several entities of a heterogeneous type, but mutually financially integrated (an example in Russia is Gazmetall CJSC);
- closed monopoly, which has protection against competition in the form of legal restrictions, patents and copyrights;
- an open monopoly, which is characterized in that there is a single product supplier on the market that does not have special protection against competition.
In addition to the above, there are other types of monopolies. Consider some of the types of this phenomenon.
Natural monopoly
Often, a situation arises in the market where 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 features of customer service and the process.
In any state of our planet there are natural monopolies. Examples of this are telephone services, energy, transportation, etc.
Natural monopolies also work in the field of:
- transportation of oil products, gas and oil through pipelines of main importance;
- services to provide the public with public postal and electric communications.
Take, for example, the electric power industry. There is also a natural monopoly here. Examples in Russia are the 700 existing thermal power plants, state district power stations and hydroelectric power stations, which were merged into an open joint-stock company RAO UES of Russia. The company was formed in 1992, when fifty of the most advanced power plants were withdrawn from the composition of the territorial subordination of AO-energo. Today, RAO UES of Russia owns the entire network of power lines in the country.
The gas industry also did not bypass the natural monopoly. Examples in Russia are eight gas production associations , as well as thirteen regional transport companies for its transportation combined in RAO Gazprom. This company accounts for one fourth of all revenues to the state budget.
Gazprom OJSC delivers 56% of supplies to Eastern and 21% to Western Europe. He also has assets abroad, which are shares in companies owning gas distribution and gas transmission systems.
The natural monopolist in Russia is the railway industry. The share of railway facilities of Russian Railways, as well as freight turnover, is 80% of all transportation in the country. Great specific gravity and passenger traffic. He is 41%.
There are other natural monopolies in Russia. Examples of this are Rosneft, Rostelecom, etc.
Examples of monopolies in the natural world are somewhat different from Russian ones. The legislative acts of Western countries use such terms as:
- public service;
- the service everyone needs;
- network service, etc.
So, in the UK there is no legal fixation of the term "natural monopolies". Examples of societies that are “necessary for everyone” relate to railway structures, transmission and distribution of electricity, water supply and sewage. 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 market demand by providing a product or service with a low, but at the same time providing a normal level of profitability price. This applies to pipeline and railway 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 such companies that were able to gain 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 them lies in the successful development of production, as well as in the concentration of capital, and, as a consequence, in increasing the scale of activity. The second way is faster. Its basis is the centralization of capital, that is, voluntary association or takeover of bankrupt organizations. At the same time, the mass of small and medium enterprises is turning into a larger one. There is an artificial monopoly. It covers a certain segment of the market and has no competitors.
Currently, artificial monopolies are widespread. Examples of such associations are concerns, trusts, syndicates and cartels. Every entrepreneur seeks to gain a monopoly position. It allows you to eliminate a number of risks and problems associated with competitors, as well as take a privileged position in the market. At the same time, the monopolist is able to influence other market participants and impose their 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 release products or provide services to only one enterprise. Thus, artificial monopolies also arise. Examples of this are in most countries of the world. These are organizations based on state preferences. An example in Russia is the Mosgortrans company. It provides the capital with land transport. Moreover, the government does 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 product boundaries of the monopoly entity and the forms of control over it. At the same time, one company is granted the exclusive right to carry out one or another kind of activity. These organizations are state owned. They are subordinate to the central authorities, ministries, etc. State monopoly groups enterprises of one industry. This leads to a lack of competition in the market.
There are state monopolies in Russia. Examples of activities regulated by legislation are given below. They include:
- activities related to the circulation of psychotropic and narcotic drugs;
- work in the field of military-technical regulation;
- cash issue and organization of their circulation on the territory of Russia;
- branding and testing of precious metal products;
- production and circulation of ethyl alcohol;
- export and import of certain goods.
Where is the state monopoly particularly pronounced? Examples of the use of administrative power can be seen in various fields. This is the Bank of Russia. He has a monopoly on the organization, circulation and issue of cash. Such a right was given to him by legislative acts.
In the field of health, there is also a state monopoly. Examples relate to drug manufacturing. So, the FSUE “Moscow Endocrine Plant” has monopoly rights. It produces drugs that are used in various fields of health. 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 sphere, 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. Examples of such situations are currently scarce. Today this phenomenon is quite rare. More often, several companies compete with each other at once. Currently, as a rule, only with the support of the state can a pure monopoly exist. In this case, examples can be given only for entities offering their products on local markets. The simplest of them is when a company dictates its price to consumers. However, the cost of services or goods of pure monopolies may be under state control. At the same time, such business entities will be protected from other sellers entering the scope of their activity 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 the production of bauxite in America. This natural resource is the main raw material for the production of aluminum.
A striking example of a pure monopoly in Russia is the local electricity and gas supply companies of settlements. In addition, these are companies containing water supply networks. Utilities are the most successful examples of such business entities worldwide.
Open monopoly
In the market, a situation may arise when a company starts producing 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 some period of time, the company is the only supplier of new goods. Competitors of such companies appear on the market a little later.
If you give examples of an open monopoly, it is worth recalling Apple, which was the first to offer touch technology to consumers.
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 this situation, the buyer and seller know each other. At the same time, they conduct the sale of finished products under strict price control. Examples of bilateral monopolies relate to situations where a firm sells its goods 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 one type or another of business entities. Many of them belong to several types of different monopolies at once. An example of this is business entities serving telephone networks. This includes gas and electricity companies. All of them have signs not only of a natural, but also of a closed monopoly. Examples may apply to other areas of activity.
However, the position of a business entity is often radically changing. Thus, the existing advantages of natural monopolies are not their integral side. The market position of such business entities may undergo changes when competitors develop the latest technologies. The position of closed monopolies is not sustainable either. All privileges and privileges given to them may be canceled by newly introduced legislative acts.