Topic 22. MARKET POWER: MONOPOLISTIC COMPETITION (POLYPOLY)

1. The similarity of polypoly with perfect competition and monopoly
2. Specific features of polypoly
3. Profit maximization under polypoly conditions
1. The similarity of polypoly with perfect competition and monopoly. Monopolistic competition(polypoly) - a market structure in which there are many firms selling similar, but not the same products. It is similar to both monopoly and perfect competition at the same time, since in the short run a monopolistic competitor behaves like a monopolist, and in the long run like a perfect competitor.
2. Specific features of polypoly. The properties of monopolistic competition lead to the following results: in the long run, due to low barriers, firms can enter the market if there is excess profit there, and leave it in case of losses. As a result, the market is in a state of perfect competition. But the polypolist in this situation behaves differently and still receives excess profit, since, unlike a perfect competitor, he has:
a) there is excess production capacity, allowing it to regulate the volume of production;
b) marginal cost is not equal to price.
It is because of these two differences that a monopolistic competitor in the long run is similar, but not identical, to a perfect competitor.
3. Profit maximization in a polypoly. Profit maximization is carried out by a monopolistic competitor within the framework of the general rule for imperfect competition MC= MR< P with the peculiarity that he sets the price for his product floating in a certain range. Outside the range - extreme points: on the left - monopoly, on the right - perfect competition.
Maneuvering the polypoly within the range of overcapacity helps it attract additional buyers when the price drops.
On the graph, you can track this process (Fig. 22.1).

With limited options in price competition, polypo sheets are very sensitive to marketing where between them unfolds non-price competition(Fig. 22.2).
In general, monopolistic competition is less efficient than perfect competition, since here the marginal cost is below the market price, which leads to the withdrawal of part of the “consumer surplus” in favor of the seller.

Topic 24. ANTI-MONOPOLY REGULATION OF THE MARKET

1. Antimonopoly policy of the state. The market operates according to certain principles, which the monopoly undermines. Therefore, the fight against monopoly is at the same time the defense of the basic principles of the market economy.
Antitrust policy- this is a purposeful activity of state bodies to protect and strengthen competitive principles in the economy and create obstacles to the emergence of excessive power of monopolies.
This policy finds expression in the following actions:
– prevention of the formation and reduction of the existing sphere of monopoly pricing;
– development of antimonopoly legislation and its application in economic practice;
– exclusion of conditions for the emergence of a deficit in the economy;
- carrying out decentralization of resources with their excessive concentration in one hand;
- forced unbundling of firms that monopoly control the market.
2. Regulation of the activities of a natural monopoly. natural monopoly It is a type of monopoly that cannot be eliminated without harm to society.
It occurs in areas where one producer, using the positive effect of scale of production, satisfies completely the market demand. If, under these conditions, forced competition between producers is introduced, then their total costs will exceed the level of costs of the former monopolist, which will inevitably cause a rise in prices (for example, the supply of competing water, electricity, gas networks to a residential city house).
3. Antimonopoly policy of the state. The state is interested in ensuring that natural monopolists do not abuse their position.
In the most developed form, antitrust law exists in the United States, where it first appeared in 1890 with the adoption of the antitrust law. Sherman law.

Topic 25. DEMAND FOR FACTORS OF PRODUCTION

1. Features of the market of factors of production. The market sells not only goods and services that go into the final personal consumption of the population, but also the factors by which they are produced. At the same time, the market for factors of production has the following differences from the commodity market: a) the demand for factors of production is secondary, derived from the demand for goods; b) the more easily a factor is substituted in production, the more elastic the firm's demand for it in the factor market.
2. Rental and capital price of a factor of production. Labor, land, capital in the production process are used repeatedly over a long period of time, often for years. Their price has two levels - this is the rental and capital price.
Rolling price factor- the amount of money paid for its use within a certain limited period.
Capital factor price- the total price resulting from the summation of the individual rental prices of the factor for the entire period of its use.
3. Conditions for the optimal combination of factors. The entrepreneur makes an additional demand for a factor of production only on the condition that it will bring him additional revenue. Moreover, the increase in revenue must exceed the increase in costs. If they become equal, then this will be a signal to stop increasing production volumes and, accordingly, market demand to the factor of production. In this state, the firm maximizes profit.
The increase in the total income of the firm is affected not only by the marginal income from an additional unit of resource, but also by the increase in the volume of production. Therefore, if, for example, labor acts as such a factor, then:
MRPL=MR x MPL,(25.1)
where MRPl– marginal profitability from the “labor” factor; MR- marginal income; MPL is the marginal product of the labor factor.
With the expansion of production, the marginal profitability of a factor of production decreases due to the action in the economy law of diminishing marginal productivity.
With perfect competition MR= P, That's why:
MRPL = P x MPL.(25.2)
The marginal return of the labor factor shows how much the firm is willing to pay for hiring an additional worker, i.e. MRPl= W, where W– wage additional worker. In general, equality
W = MRPL=MR x MPL(25.3)
allows answering the question: what should be the firm's demand for the labor factor in order to maximize its profit? The same applies to other factors - capital (TO) and ground (N):
a ) rK = MR x MPk;(25 4)
b) rN=MR x MPN,
where rK– income from capital; rN- Income from the land.
Having reduced the income from various factors (labor, land and capital) into general equality, we obtain the condition for the optimal combination of factors:

To minimize production costs, the ratio of the costs of using factors to the value of its product must be the same for all factors and equal to the marginal income.
To maximize profit, this condition must be supplemented by equality with marginal cost.
Compliance with the optimality condition for the combination of factors allows you to replace one factor with another.

Topic 26. LABOR MARKET

1. Features of the labor market. Labor market- a specific market, since it sells not just goods and services, but the ability of people to create them. This market cannot exist on the principle of complete self-regulation. The state has been regulating labor relations in the economy since ancient times.
The most important category of the labor market is wage- the amount of money that the employee receives for work. However, wages are not only a form of income for the seller, but also the price of labor - for the buyer, paid by him for the right to use for a certain time.
2. Demand in the labor market. The market demand for labor, in accordance with the law of demand, is inversely related to wages. This dependence finds a graphical expression in the labor demand curve (Fig. 26.1).
Labor demand curve w\ specific, as it has restrictions from above and below. The demand for labor is dictated by the need for the entrepreneur to make a profit - otherwise it is pointless to do business. It is this situation that is illustrated by the LD curve limitation L.D.
The lower limit also makes economic sense and is caused by the fact that the employee needs to restore his labor activity; support a family; study, be treated, improve one's skills, etc. In addition, a person needs various social, spiritual and material benefits (religion, leisure, culture, sports, etc.).

All of the above requires funds and should be objectively taken into account in the price of labor. Based on the lower limit of the price of labor, minimal salary, providing a minimum for the worker.
3. Supply in the labor market. The supply of labor in the market also depends on the size of wages, but this dependence is opposite to demand: with an increase in wages, supply increases (Fig. 26.2).
There are two effects on the supply side of labor - substitution and income.
The combined action of these effects leads to the fact that the supply curve is modified and takes on an unusual shape (Fig. 26.3).
4. Equilibrium price for the "labor" factor. If we combine the graphs of demand and supply of labor, we get a graph that characterizes the equilibrium price (Fig. 26.4).

Topic 27. WAGES AND EMPLOYMENT

1. The essence of wages. Wage acts as a reward for labor and is the price of labor in its purchase and sale.
Wages in modern theory are considered in two ways:
1) as a person's total earnings, which includes fees, bonuses, various remuneration for work;
2) as a rate or price paid for the use of a unit of labor in a fixed period of time (hour, day, week, month, year).
The level of wages is under the simultaneous influence of the entire social environment of society and the market mechanism. Therefore, the named distinction avoids confusion of their impact on wages.
2. Nominal and real wages. The incomes of employees have a monetary value, and money depreciates in conditions of economic instability and rising prices. Consequently, the wages of workers are dependent on the amount of inflation. In order to track this dependence, a distinction is made between nominal and real wages.

Under imperfect competition, demand is not perfectly elastic. The demand curve becomes decreasing and the volume of sales can only be increased by lowering the price, that is, there is a constant alternative: higher prices or more sales. Thus, the firm must choose the price that is most profitable for itself.

In imperfect competition, more sales lead to lower prices. At the same time, the last (additional) unit of production, like all previous ones, can only be sold at a lower price.

As a consequence, marginal revenue is less than the proceeds from the sale of an additional unit of output by the amount of the total reduction in the selling price of all other units of goods caused by the production and sale of this additional unit. Therefore, the marginal revenue curve always passes below the demand curve, and the gap between them widens rapidly.

To determine the optimal price and sales volume leading to maximum profit, it is necessary to identify the relationship between price elasticity of demand and revenue.

When demand is elastic, a decrease in price leads to an increase in total revenue.

When demand is inelastic, a price decrease leads to a fall in total revenue.

Therefore, a profit maximizing producer will always seek to avoid the inelastic part of the demand curve for his product, choosing some combination of "price-quality" on the elastic part.

The degree of elasticity of demand for the products of a given firm will depend on the number of competitors and the degree of product differentiation (the more competitors and the weaker the deformation, the greater the elasticity of the demand curve, the less the impact on the price of each seller and other terms of sale, the more the situation approaches net competition).

The optimal volume of production and the corresponding price is determined in two ways: firstly, using gross values, and secondly, using marginal values.

Determining the maximum profit by comparing gross income and gross costs

The seller strives to maximize profit.

The maximum profit is the maximum difference between total revenue and total costs.

TR - total profit.

The vertical difference between TR and TC gives the gross margin, which graph (TP) starts and ends below the horizontal axis. In a certain interval, TP is positive. TP reaches its maximum when the slope of its curve (tangent slope) is zero. At this point, the curves TC and TR have the same slope (their tangents corresponding to MC and MR are parallel at these points), and hence MC = MR.

It should be noted that ≠ or

Determining maximum profit by comparing marginal revenue and marginal cost

The same result can be obtained by comparing marginal revenue MR and marginal cost MC.

While with an increase in the volume of production, marginal revenue exceeds marginal costs, i.e. MR - MC > 0, the total profit is growing and it makes sense to increase production. Once marginal cost exceeds marginal revenue i.e. MR–MC< 0, прибыль начинает снижаться и фирма начинает переставать наращивать производство, а из этого следует, что максимальная прибыль фирма получит при объёме производства, для которого характерно равенство MC = MR.

Point E is the profit maximization point or equilibrium point in an imperfectly competitive market.

To find the profit-maximizing price, let's draw a vertical line to the demand curve and find the optimal price at point F. This is the volume and price that bring the company the greatest profit. The amount of profit is measured by the area of ​​the shaded rectangle.

Thus, the typical consequences of imperfect competition are:

Underproduction of goods;

Overpricing;

The trend towards economic profit.

Formation of market prices for factors of production and distribution of income in a market economy.

Any company in the production process uses production resources. The company's entry into the resource market as a buyer involves taking into account the characteristics of each resource market.

In the market mechanism, the price for each factor of production, as for any other commodity, is determined by the point of intersection of the supply and demand curves.

The demand for factors of production in each firm is determined by the desire to receive a profit from the marginal product that exceeds the price of this factor. The total market demand curve for this factor determines the demand of all firms taken together. The supply curve will be determined by all the owners of a given resource, taken together, who are willing to provide it to the market. As a result of the interaction of the aggregate market demand for factors of production and market supply, an equilibrium market price for this factor will be formed.

There are three main factors of production:

Capital

Pricing in each of these markets has its own characteristics.

land market

The main feature of the land market is a completely inelastic supply. Because the amount of usable land in a given country is a fixed amount in a given time period. Therefore, the equilibrium market price (in this case, the rent) is set at a level that is determined by competition from the demand side.

The equilibrium is the rent from the worst piece of land. The higher the productivity of land, the higher, other things being equal, the higher the demand for land of a given quality and the higher the equilibrium level of rent.

capital market

The equilibrium market price for elements of productive capital (machinery, equipment, structures, vehicles, infrastructure elements, etc.) is determined by the intersection of the usual supply and demand curves.

The change in the equilibrium price depends on the ratio of the elasticity of demand and supply for this type of capital (in the long run, the supply of means of production is more elastic than in the short run).

Labor market

The labor market, unlike other resource markets, is more influenced by social, psychological and other human factors on the conditions for the sale and purchase of such a specific product as labor. The labor supply curve of an individual worker has a specific shape and reflects the worker's response to an increase in wages. Under certain circumstances, the number of hours offered by the worker may be reduced despite the increase in the wage rate.

The shape of the supply curve can be explained using the income effect and the substitution effect. The substitution effect encourages people to work harder, because the increase in the wage rate makes leisure economically unprofitable (predominant at low rates).

The income effect is that higher wages increase the well-being of a person, and he begins to value free time more, refusing additional work and, accordingly, additional earnings in favor of free time (acts at high wage rates).

This pattern should be taken into account by employers entering the labor market as buyers.

The mechanism of formation of market prices for factors of production simultaneously solves the problem of income distribution among all subjects of market relations. The provision of a factor of production on the market generates the corresponding type of income: labor - wages, capital - profit and interest, land - rent.

With the principles of income generation common to all, the conditions of income inequality are preserved and constantly reproduced, which exacerbates the contradictions associated with the economic mechanism for the formation of poverty and wealth.

The most important factor deepening the gap between poverty and wealth is income differentiation, which includes wages, social transfers, property income and business income. The Lorenz curve is used to assess income differentiation.

Bisector OA shows an equal distribution of income, curve OA - the real distribution of income. The space between the bisector and the curve characterizes the degree of income inequality.

Federal Agency for Health and Social Development

State educational institution of higher professional education

MOSCOW STATE

MEDICAL AND DENTAL UNIVERSITY

FACULTY OF ECONOMICS

Department of Economic Theory

COURSE WORK

By discipline: « Economic theory»

on the topic: Market model of imperfect competition and profit maximization under pure monopoly.

Performed

2nd year student of group 2

Emelyanova Olga Vyacheslavovna

supervisor

Lyskova Larisa Antonovna

Moscow 2007

1. Introduction.

2. The economic essence of profit. profit theories.

3. The market of imperfect competition. Monopolies.

4. Comparative analysis of profit maximization conditions under conditions of perfect competition and monopoly.

5. Monopolies in the Russian economy and the conditions for maximizing the profits of Russian firms.

6. Conclusion.

7. List of used literature.

1. Introduction

Within the framework of classical economic theory, competition is considered as an integral element of the market mechanism. A. Smith interpreted competition as a behavioral category, when individual sellers and buyers compete in the market for more profitable sales and purchases, respectively. Competition is the very market that coordinates the activities of its participants.
Competition acts as a force that ensures the interaction of supply and demand, balancing market prices. As a result of the rivalry between sellers and buyers, a common price is established for homogeneous goods and a specific type of supply and demand curves.

In modern microeconomic theory, competition is understood as a certain property of the market. This understanding arose in connection with the development of the theory of market morphology. Depending on the degree of perfection of competition in the market, different types of markets are distinguished, each of which is characterized by a certain behavior of economic entities.

Perfect competition is understood as competition between producers, sellers of goods, which takes place in the so-called ideal market, where an unlimited number of sellers and buyers of a homogeneous product are represented, freely communicating with each other. Any change in the conditions for the existence of perfect competition leads to the emergence of imperfect competition. In general, only the latter really exists, but a competent economist, in my opinion, should know the mechanisms of the functioning of the market both under perfect and imperfect competition. This work is dedicated to this. Let's try to consider imperfect competition and monopoly in more detail.

2. The economic essence of profit. profit theories

The basis of the market mechanism is the economic indicators necessary for planning and objective assessment of the production and economic activities of the enterprise, the formation and use of special funds, the comparison of costs and results at individual stages of the reproduction process.

Making a profit plays a big role in stimulating the development of production. But due to certain circumstances or omissions in work (non-fulfillment of contractual obligations, ignorance of the regulatory documents governing the financial activities of the enterprise), the enterprise may incur losses. Profit is a generalizing indicator, the presence of which indicates the efficiency of production, a favorable financial condition.

The financial condition of an enterprise is a characteristic of its competitiveness (ie, solvency, creditworthiness), the use of financial resources and capital, and the fulfillment of obligations to the state and other organizations. The growth of profits creates a financial basis for the implementation of expanded reproduction of the enterprise and the satisfaction of the social and material needs of the founders and employees.

Profit is the monetary expression of the main part of the monetary savings created by enterprises of any form of ownership.

The basis for the procedure for the formation of profits is adopted for all enterprises, regardless of ownership, a single model. (fig.1.1)

Profit, which takes into account all the results of the production and economic activities of the enterprise, is called balance sheet profit. It includes profit from the sale of products (works, services), profit from other sales, income from non-sales operations, reduced by the amount of expenses on these operations.

Fig. 1.1 Scheme of formation of profit of an economic entity.

In addition, a distinction is made between taxable income and non-taxable income. After the formation of profit, the enterprise pays taxes, and the rest of the profit is at the disposal of the enterprise, i.e. after income tax is paid, is called net income. Net profit is the difference between balance sheet profit and tax payments due to it. The enterprise can dispose of this profit at its own discretion, for example, direct it to production development, social development, incentives for employees and dividends on shares, retained earnings remaining at the disposal of the enterprise are directed to increase the company's own capital and can be redistributed to the reserve fund - the contingency fund losses, losses, accumulation fund - the formation of funds for production development, consumption fund - funds for bonuses to employees, the provision of material assistance, the social fund. development - for various festive events.

Fig 1.2. Profit classification

Various aspects of the production, marketing, supply and financial activities of the enterprise receive a complete monetary value in the system of indicators of financial results. Summarized, the most important indicators of the financial performance of the enterprise are presented in the profit and loss statement. The main indicators of profit used to evaluate production and economic activities are: balance sheet profit, profit from the sale of products, gross profit, taxable profit, profit remaining at the disposal of the enterprise or net profit.

The main purpose of profit in modern economic conditions is a reflection of the effectiveness of the production and marketing activities of the enterprise. This is due to the fact that the amount of profit should reflect the correspondence of the individual costs of the enterprise associated with the production and sale of its products and acting in the form of cost, socially necessary costs, an indirect expression of which should be the price of the product. The increase in profits in the conditions of stable wholesale prices indicates a decrease in the individual costs of the enterprise for the production and sale of products.

In modern conditions, the importance of profit as an object of distribution created in the sphere of material production of net income between enterprises and the state, various sectors of the national economy and enterprises of the same industry, between the sphere of material production and the non-production sphere, between enterprises and its employees is increasing.

First, profit characterizes the final financial result of the entrepreneurial activity of the enterprise. It is an indicator that most fully reflects the efficiency of production, the volume and quality of manufactured products, the state of labor productivity, and the level of cost. Profit indicators are the most important for assessing the production and financial activities of the enterprise. They characterize the degree of his business activity and financial well-being. The level of return of advanced funds and the profitability of investments in the assets of the enterprise are determined by profit. Profit also has a stimulating effect on the strengthening of commercial calculation, the intensification of production.

Secondly, profit has a stimulating function. Its content is that profit is both a financial result and the main element of the financial resources of the enterprise. The actual provision of the principle of self-financing is determined by the profit received. The share of net profit remaining at the disposal of the enterprise after paying taxes and other obligatory payments should be sufficient to finance the expansion of production activities, scientific, technical and social development of the enterprise, material incentives for employees.

Profit growth determines the growth of the enterprise's potential, increases the degree of its business activity, creates a financial base for self-financing, expanded reproduction, and solving the problems of social and material needs of labor collectives. It allows you to make capital investments in production (thereby expanding and updating it), introduce innovations, solve social problems at the enterprise, and finance activities for its scientific and technical development. In addition, profit is an important factor in assessing the company's capabilities by a potential investor; it serves as an indicator of the efficient use of resources, i.e. It is necessary to assess the activities of the company and its capabilities in the future.

Thirdly, profit is one of the sources of formation of budgets of different levels. It enters the budgets in the form of taxes and, along with other revenues, is used to finance and meet joint public needs, to ensure that the state performs its functions, state investment, social and other programs, and takes part in the formation of budget and charitable funds. At the expense of profit, a part of the enterprise's obligations to the budget, banks, other enterprises and organizations is also fulfilled.

Since profit is the most important indicator characterizing the financial result of the enterprise, all participants in production are interested in increasing profits.

To manage profit, it is necessary to reveal the mechanism of its formation, to determine the influence and share of each factor of its growth or decrease.

Factors affecting profit can be classified according to different criteria (Figure 1.3).

Figure 1.3 Factors affecting profit

In the modern interpretation, net profit is considered as the balance after payments by the owner of all factors of production (interest, rent, wages), including the costs of lost opportunities or the so-called implicit costs. Under perfect competition, the total product is reduced to payments to factors of production, that is, under these conditions, economic (net) profit does not exist. However, this view of profit did not always exist, and its evolution was closely related to the evolution of views on entrepreneurship.

The concept of an entrepreneur performing a function completely different from the functions of a capitalist and manager was formalized in the middle of the eighteenth century by the French economist R. Cantimon. He showed that the divergence between market demand and supply creates opportunities to buy low and sell high. And Cantillon called the people who use the opportunities for profit in these conditions entrepreneurs, i.e. individuals willing to buy at a known price and sell at an unknown price. Moreover, he noted that these activities do not necessarily require production activities and do not necessarily absorb the entrepreneur's personal funds. According to Cantillon, entrepreneurial profit is a matter of foresight and the willingness to take risks, and entrepreneurship itself is a special kind of economic function, consisting in bringing supply in line with demand in various commodity markets. This idea of ​​Cantillon was further developed in the works of the American economist F. Knight. As for the representatives of classical political economy, neither Smith nor Ricardo singled out the functions of an entrepreneur, apparently believing that the processes of production and investment are more or less automatic, not requiring decisions regarding risk assessments and any kind of foresight. Nor did they make a clear distinction between profit and interest.

So in considering the concepts of entrepreneurship, one should immediately move from Cantillon to J.B. Say, who, on the one hand, distinguished between the provision of capital to the enterprise, and on the other hand, the numerous functions of supervision, management, control and evaluation. The reward for the first function is interest, and profit acts as a reward for the rational combination of all factors of production. Say drew attention to the creative nature of this function, in contrast to the routine, everyday operations of production management, in fact, distinguishing between the functions of an entrepreneur and a simple manager. The "marginal revolution" removed the problem, since under conditions of perfect competition and static equilibrium, the total product is exactly reduced to factor payments in accordance with the principle of marginal productivity. And what the classics called profit is now called interest.
It is no coincidence that therefore the interest in the theory of profit coincides with the interest in the analysis of dynamic models. And Schumpeter's contribution to profit theory is undeniable. Profit in his dynamic model of economic development acts as a reward for entrepreneurial activity, for the discovery and implementation of new combinations of factors of production, for the embodiment of previously unknown, new market opportunities in the form of new goods, services, technologies, etc. According to Schumpeter, entrepreneurial profit is temporary, short-lived and disappears as soon as the innovative form of production turns into a traditional, repetitive activity. The entrepreneur himself, as we have already noted, is a special social type with the ability to realize diverse market opportunities.

how component The modern theory of profit includes a view on the nature of profit, expressed by the American economist F. Knight (1885-1972) in his famous book "Risk, Uncertainty, Profit" (1921), where he considers profit as income for bearing the burden of uncertainty. At the same time, Knight draws a clear distinction between the concepts of "risk" and "uncertainty". In his opinion, a significant part of the risks in the economic process is calculable, is an object of insurance and therefore becomes an item of production costs deducted from profits. Profit, according to Knight, stems from true uncertainty and is an unforeseen difference between expected and actual sales proceeds as a result of guessing the price. Therefore, profit can be either positive or negative. Uncertainty generates a discrepancy between the actual and expected income and the quantitative expression of this discrepancy and is profit (loss). As a consequence, profits will disappear in a stationary economy where all future events can be predicted.

In addition to profit theories:

a) as a temporary income received from technical innovations (I. Schumpeter)

b) as a result of the uncertain nature of future events (F. Knight)

c) profit as income generated by the existence of monopolies.

Profit can exist if at least one of these conditions is present. Under conditions of perfect competition, which exists in static conditions with complete certainty of prospects, the lowering of prices to the level of production costs eliminates any additional profit in excess of the sum of wages, interest and rent, which is formed under the influence of competition.
An overwhelming amount of economic research in the last third of the nineteenth and early twentieth centuries was devoted to the analysis of static equilibrium and the problems of the optimal allocation of resources in conditions of perfect competition. However, the strengthening of monopolistic tendencies in the economy made it necessary to pay attention to the problem of pricing and distribution of resources under the domination of monopolies.

3. Imperfect competition market. Monopolies

Markets of imperfect competition are the most common structures in real life. Based on competition among firms for sales volume, these market models provide the closest representation of reality to the mechanism of interaction between firms in the markets.

Imperfect competition refers to a market that lacks at least one of the conditions of pure competition. There are three main types of imperfect competition:

Monopoly;

Monopolistic competition;

Oligopoly.

There are two approaches to the concept of "monopoly". First, a monopoly can be thought of as a type of firm. It is a large association that occupies a leading position in a particular sector of the economy (or in several sectors) in a country or in the world as a whole. Usually, a monopoly is associated with large and world-famous companies, although they may hold a small part of the market.

But there may be another interpretation of the concept of "monopoly" - this is the economic behavior of the firm. A situation is possible in the market when buyers are opposed by a monopoly entrepreneur who produces the bulk of products of a certain type. In this case, the monopolist may be a relatively small enterprise. Conversely, a large firm may not be a monopolist if its share is this market small.

Turning to monopoly as a type of economic structure of the market, it should be considered as a certain type of economic relations, which allows one of the participants in these relations to dictate their conditions on the market for a certain product.

Monopoly assumes that there is only one producer in the industry, which completely controls the supply of goods. This allows him to set the price that will bring the maximum profit. The extent to which monopoly power is exercised in setting prices will depend on the availability of close substitutes for the good. If the product is unique, then the buyer is forced to pay the assigned price or refuse to purchase. The number of products that have no substitutes is limited. The pure monopoly includes the provision of utilities, gas, water and electricity.

Since the monopoly firm usually has higher profits, it naturally attracts other producers to the industry. However, it is almost impossible to get into a monopolized industry, because the barriers to entry into it are quite high. Such barriers can be both legal (or natural) obstacles, and any actions that artificially prevent new firms from entering the industry.

The real barriers to entry into a monopolized sector of the economy include the following:

1. The effect of scale of production.

In conditions of large-scale production with monopolization of the market, the volume of production of the firm grows faster than the resources used. Consequently, the cost per unit of output for such a firm is much lower, which allows, from a social point of view, to significantly save production resources. Such a monopoly, in which long-run average costs are minimal, is called a "natural monopoly". In other words, this is an industry in which a product can be produced by one firm at a lower cost than if it were produced not by one, but by several firms. Therefore, the economies of scale are so great that it is advisable to concentrate the output of this product in one firm.

A natural monopoly can include the provision of various public services (water supply, sewerage, gas and energy conservation, etc.), cable television telephone companies, etc. Under these conditions, a monopoly can be justified economically.

In general, considering a monopoly as a certain type of economic structure that allows you to dictate your terms on the market for a certain product or service, it must be borne in mind that, regardless of the type of monopoly (“natural” or not), it is extremely difficult for new competitors to break into such an industry. difficult, because under other conditions it requires huge investments. In addition, the dominant firm in the industry can reduce the price of its products for a certain time (because it has lower production costs) in order to destroy a potential competitor.

Organizational monopoly - acts as an association of similar types of activities of enterprises and organizations (branch ministries, concerns, associations)

2. Exclusive rights of monopolies.

Such rights are due to the fact that the governments of a number of countries officially grant some firms the status of the sole (monopoly) seller of services or goods (transport services, communications, gas supply, etc.), retaining, as a rule, the right to regulate their actions in order to exclude (or minimizing) abusing monopoly power. In this situation, it is almost impossible for a third-party firm to “enter” such an industry.

3. Patent and license protection of monopolies.

The government guarantees patent protection for new products and production technologies, which provides manufacturers with a monopoly position in the market and, for a certain period of time, guarantees their exclusive right to own the market for this product.

4. Ownership of monopolies for the most important types of raw materials.

Some companies may be monopolists by virtue of the fact that they own the production resources necessary for the manufacture of a monopolized product. Thus, the American aluminum company is the owner of all major sources of bauxite (aluminum ores).

Thus, the emergence of monopolies is facilitated by natural and legal barriers to entry into the industry, which prevent competition from new sellers.

So, we can summarize the above, that by monopoly we need to understand a market structure that meets the following conditions:

1. The release of goods by the entire industry is controlled by only one seller.

2. A product produced by a monopoly is special in its kind and has no close, related substitutes.

3. Monopoly is closed to new firms entering the industry.

The theory and practice of the functioning of economic systems show that the monopolization of the national economy is due to a number of complementary factors:

The desire of an entrepreneurial firm to maximize profits, which focuses on expanding the scale of production;

Differentiation of commodity producers in accordance with the laws of the market, when “prosperous” firms and less successful ones are singled out, which are forced to leave the industry market;

The advantages of large-scale production, which are of an objective nature; long-term preservation of a positive scale of production, with a decrease in average and marginal production costs;

The influence of scientific and technical progress, when the possibility of introducing an innovation implies the presence of large capital, and the very introduction of such an innovation leads to the emergence of additional economic benefits. It should be noted that many sectors of the 1st division of the national economy are simply doomed to the formation of "natural monopolies";

The costs of competition, which is accompanied by an increase in the overall risk of managing and contributes to the formation of appropriate unions or "economic monopolies";

A model of implemented economic policy that promotes the formation of, for example, "national champions".

In economic life, the monopoly acts as a large entrepreneurial firm, etc., which has certain economic advantages.

There are two main trends in the formation of monopolies:

the emergence of large enterprises or firms based on the concentration of production and their dominant position in the industry;

the formation of alliances or the achievement of agreements by a number of large and medium-sized firms.

The possibility of such unions increases at a certain stage, following a decrease in the number of economic entities in the industry. The need for a monopolistic union stems from the idea of ​​coordinating activities and the desire to reduce the costs of competition.

Cartel - association (union) of a number of enterprises of one branch of the national economy, which does not limit their independence, involves the establishment of uniform prices, the division of the market, the definition of a quota for production and sale of products.

Syndicate - consolidation of a number of enterprises of the same branch of production in the liquidation of their commercial independence. In this case, joint sales of products, purchase of raw materials, etc. are provided.

Trust - unification of ownership and management of a number of enterprises in one or more sectors of the national economy with the complete elimination of their independence. In this case, corporate ownership is formed; joint-stock companies, associations like combines arise, which makes it possible to monopolize the sources of raw materials, transportation, etc.

Concern - association of enterprises of a number of sectors of the national economy, including banks, transport, trading companies.

A monopoly has a dominant position in the market. This is facilitated by:

Concentration of production and capital and the emergence of an entrepreneurial firm with significant economic potential;

Centralization of production and capital, which leads to the formation of a monopolistic union;

Total shortage of goods and services, underdevelopment of market infrastructure;

Possibility of further differentiation of the product, i.e. the ability to produce goods with special consumer properties, including packaging, packaging and trademark.

Economic consequences monopolization of the economy are not unambiguous. The desire to raise the price, if it is also complemented by a decrease in production, means underutilization of resources, the unavailability of the product for a wide range of consumers.

Monopolies have significant financial and material reserves for scientific and technical progress. And there are many examples when a monopoly acts as an engine of progress, striving to break away from its closest competitors and ensure profit growth, to seize a new market.

In the structure of monopoly profits, we can conditionally distinguish:

1. average profit;

2. excess profit (economic);

3. monopolistic excess profit.

The average profit is appropriated by all ordinary entrepreneurial firms in the conditions of industry and inter-industry competition. If the industry becomes low-loss or low-profit, then the monopoly leaves it.

Surplus profit is formed as the difference between the social and individual production costs of a given firm.

Monopoly excess profits are exclusively of market origin. This is a specific economic form of realizing the market advantage of a monopoly, through which a certain part of the product (profit) created by other enterprises is redistributed in its favor. "Donors" can be suppliers of raw materials, employees, suppliers of components, buyers of products. Therefore, the monopoly affects the interests of a wide range of subjects of the national economy.

The degree of economic power of a monopoly can be measured in many ways. For example, if we determine the share of excess profits in the total mass of appropriated profits. Abba Lerner's indicator of monopoly power (1934) is also used:

L=(P-MC)/P, i.e. = profit/price

The higher the coefficient, the greater the monopoly power.

The regulation of the economic power of the monopoly is the most important task in the overall regulation of the processes of the national economy.

4. Comparative analysis of profit maximization conditions under conditions of perfect competition and monopoly

According to the traditional theory of the firm and the theory of markets, profit maximization is the main goal of the firm. Therefore, the firm must choose such a volume of supplied products in order to achieve maximum profit for each period of sales. Profit is the difference between gross (total) income (TR) and total (gross, total) production costs (TC) for the sales period:

profit = TR - TS.

Gross income is the price (P) of the product sold multiplied by the volume of sales (Q).

Since the price is not affected by a competitive firm, it can affect its income only by changing the volume of sales. If the firm's gross income is greater than its total costs, then it makes a profit. If the total cost exceeds the gross income, then the firm incurs losses.

Total costs are the costs of all factors of production used by the firm to produce a given output.

The maximum profit is achieved in two cases:

when gross income (TR) exceeds total costs (TC) to the greatest extent;

When marginal revenue (MR) is equal to marginal cost (MC).

Marginal revenue (MR) is the change in gross revenue received when an additional unit of output is sold. For a competitive firm, marginal revenue is always equal to the price of the product:

The marginal profit maximization is the difference between the marginal revenue from the sale of an additional unit of output and the marginal cost:

marginal profit = MR - MC.

Marginal cost is the extra cost that increases output by one unit of a good. Marginal cost is entirely variable costs because fixed costs do not change with output. For a competitive firm, marginal cost is equal to the market price of the good:

The marginal condition for profit maximization is the level of output at which price equals marginal cost.

Having determined the profit maximization limit of the firm, it is necessary to establish an equilibrium output that maximizes profit.

The maximum profitable equilibrium is the position of the firm in which the amount of goods offered is determined by the equality of the market price to marginal cost and marginal revenue:

The most profitable equilibrium under perfect competition is illustrated in Fig. 3.1.

Rice. 3.1. Equilibrium output of a competitive firm

The firm chooses the level of output that allows it to extract maximum profit. At the same time, it should be borne in mind that the output that provides the maximum profit does not mean at all that the largest profit is extracted per unit of this product. It follows that it is wrong to use unit profit as a measure of total profit.

In determining the level of output that maximizes profit, it is necessary to compare market prices with average costs.

Average costs (AC) - costs per unit of output; equal to the total cost of producing a given quantity of output divided by the quantity of output produced. There are three types of average costs: average gross (total) costs (AC); average fixed costs (AFC); average variable costs (AVC).

The ratio of market price and average production costs can have several options:

· the price is greater than the average cost of production, maximizing profit. In this case, the firm extracts economic profit, i.e., its income exceeds all its costs (Fig. 3.2);

The price is equal to the minimum average production costs, which provides the company with self-sufficiency, i.e. the company only covers its costs, which makes it possible for it to receive a normal profit (Fig. 3.3);

The price is below the minimum possible average cost, i.e. the firm does not cover all its costs and incurs losses (Fig. 3.4);

The price falls below the minimum average cost, but exceeds the minimum average variable cost, i.e. the firm is able to minimize its losses (Fig. 3.5); the price is below the minimum of average variable costs, which means the cessation of production, because the company's losses exceed fixed costs (Fig. 3.6).

Rice. 3.2. Profit maximization by a competitive firm

Rice. 3.3. Self-sustaining competitive firm

Rice. 3.4. Competitive firm incurring losses

Rice. 3.5 Minimizing losses of a competitive firm

Rice. 3.6 Termination of production by a competitive firm

If, under conditions of perfect competition, the price is set exogenously and only the volume of production is chosen by the producer himself, then the monopoly can not only determine the volume of production, but also set the price. By manipulating prices and production volumes, the monopoly is able to appropriate profits in excess of the usual.

As already noted, a monopolist, unlike a perfectly competitive firm, does not take the price as given. A monopolist can be described as a price taker, not a price taker. He takes as a given not the market price, but the entire demand curve, and he chooses both the price and the volume of output. Since there is no relationship between the monopolist's price and output, there is no supply curve for the monopolist. Thus, it cannot be argued that the monopoly price and monopoly output are determined by the ratio of supply and demand. But under conditions of monopoly, as well as under conditions of perfect competition, price and output are determined by the conditions of demand and the conditions of cost formation.

Calculating the optimal positive output, the monopolist proceeds from the following considerations - if the production of an additional unit of output will increase income to a greater extent than costs, then output should be increased; if the reduction in output reduces costs by an amount greater than the decrease in income, then output should be reduced. In other words, the monopolist compares marginal cost (MC) with marginal revenue (MR).

For a monopolist, like any other imperfect competitor facing a descending demand curve, marginal revenue is below the price (P > MR). The reason for this situation is that if the demand curve is decreasing, then the volume of sales can be increased only by lowering the price.

The relationship between price and marginal revenue can be summarized as follows:

Marginal revenue = increase in total revenue from sales of one additional unit of output = the price at which that additional unit is sold - the amount of income lost due to the fact that the original output is now sold at a higher price.

When a monopolist increases output by one unit, the increase in revenue equals marginal revenue. Cost Growth is equal to marginal costs. If marginal revenue rises more than marginal cost, then total revenue rises more than marginal cost, and therefore profit increases. If the last unit of production increases costs, then output should be reduced. Thus, the firm maximizes profit by producing the volume of output at which marginal revenue equals marginal cost.

For a monopoly to have an optimal positive output that maximizes profits as long as the firm does not stop production, marginal revenue must equal marginal cost.

So, the monopolist, when issuing, sets the price in such a way that the volume of demand is equal to its optimal positive volume of output. Since marginal cost equals marginal revenue at optimal output, the price will be higher than marginal cost. Thus, the monopolist maximizes profit by raising the price above marginal cost. And yet, in the short run, a monopolist, like a perfect competitor, produces as long as he recovers his variable costs, while in the long run he must recover all total costs - both fixed and variable.

The profit earned by a monopoly is a monopoly profit, since it is the result of raising the price above the level of marginal cost. It is generally believed that monopoly prices are the highest. They are usually higher than competitive ones, but it should be noted that the monopolist seeks to maximize total profit, and not profit per unit of output. And most importantly, the rise in prices cannot be unlimited, it is limited price elasticity for the products of this company. A monopoly can only earn a monopoly profit if its demand curve is above its average cost curve. Moreover, a profit-maximizing monopolist always chooses a volume of output at which demand is elastic. This is more in his interest than inelastic demand. Since marginal cost of production is always positive, marginal revenue can never equal marginal cost at output levels for which demand is inelastic. The marginal revenue for a monopolist is always negative for output values ​​corresponding to the inelastic portion of its demand curve.

Until marginal cost is zero, the monopolist can maximize profits by setting a price for the product that maintains the elasticity of demand for it. Moreover, since demand has greater elasticity in long-term time intervals than short-term ones, the price that maximizes profit in the long-term interval may be lower than that which maximizes profit in the short-term period.

In the long run, the monopoly, maximizing profit, expands its production until the amount of output produced corresponds to the equality of marginal revenue and long-run marginal cost (MR = LRMC). If the monopolist makes a monopoly profit at this price, then it is possible to assume that there is no free entry for other sellers in this market. Otherwise, the entry of new firms would increase supply and reduce prices to a level that provides only a normal profit. Maintaining a monopoly over the long term would be impossible in the case of free market entry.

To maximize profit, the monopolist must first determine the characteristics of the market demand and its costs. The assessment of demand and costs is crucial in the process of making an economic decision. With such information, the monopolist must decide on the volume of production and sale. The price per unit of output received by the monopolist is set depending on the market demand curve.

The limit of the monopoly high price is the amount of effective demand: if the monopoly sets the price at too high a level, then the volume of sales can be significantly reduced, which will lead to a decrease in profits.

The prices at which raw materials are purchased from non-monopolized producers cannot remain at a monopolistically low level for a long time, since they cannot ensure the reproduction of this group of producers.

Under monopoly, the nature of the relationship between the price level and the magnitude of production costs also becomes different. Reducing costs does not, as a rule, automatically reduce prices in a monopolized market. And at the same time, rising costs are often used by the monopoly to set higher prices.

The goal of the monopolist is to produce such a quantity of products that MC = MR, and stop production when average cost (AC) is higher than average revenue (AR) at any volume of production. The monopolist has a lower output at a higher cost of production (with a similar industry with perfect competition and a similar cost function).

Ceteris paribus, monopoly prices are higher than those in a fully competitive market. The social cost of a monopoly is the loss to consumers and society in net utility due to monopoly power in the market.

To show at what price and at what volume of output the marginal revenue of the monopolist will be as close as possible to the marginal cost and the resulting profit will be the largest, let us turn to a numerical example. Let's imagine that the firm is the only manufacturer of this product on the market, and we summarize the data on its costs and income in table 3.1.

Table 3.1. The dynamics of costs and incomes of firm X in a monopoly

We assumed that 1 thousand units. a monopolist can sell its products at a price of 500 rubles. In the future, with the expansion of sales by 1 thousand units. he is forced to reduce its price by 2 rubles each time, so the marginal revenue is reduced by 4 rubles. with each increase in sales. The firm will maximize profit by producing 14 units. products. It is at this level of output that its marginal revenue is closest to marginal cost. If it produces 15 thousand units. then this additional 1 thousand units. will add more to costs than to income, and thereby reduce profits.

In a competitive market, when the firm's price and marginal revenue are the same, 15,000 units would be produced. products, and the price of this product would be lower than in a monopoly:

Graphically, the process of choosing a price and volume of production by a monopoly firm is shown in Fig. 3.7.

Fig.3.7. Determination of price and volume of production by a monopoly firm: D - demand; MR - marginal revenue MC - marginal cost

Since in our example, production is possible only in whole units of production, and point A on the graph lies between 14 and 15 thousand units. products. The 15th thousand not produced by the monopolist (and it would have been produced under competitive conditions) means a loss for consumers, since some of them refused to buy because of the high price set by the monopoly manufacturer.

Any firm whose demand is not perfectly elastic will face a situation where marginal revenue is less than price. Therefore, the price and volume of production that bring her maximum profit will be respectively higher and lower than under perfect competition. In this sense, in markets of imperfect competition (monopoly, oligopoly, monopolistic competition), each firm has a certain monopoly power, which is strongest under pure monopoly.

5. Monopolies in the Russian economy and the conditions for maximizing the profits of Russian firms

Russian antimonopoly legislation does not define the concept of “monopoly”, since in reality there are no pure monopolies. But there are enterprises that have the main feature of a monopoly - a significant market share of a certain product. A “real monopoly” is an economic entity that has a market share of 65% or more in a given product. In this case, the firm is said to
"dominant position". The dominant position is also recognized as the position of an economic entity, whose share in the market of a certain product ranges from 35% to 65%, if this is established by the antimonopoly authority.

All enterprises with a share of more than 35% on the market of a certain product are entered in a special register (regional and federal market).

The purpose of the registry is to prepare information base data on the largest market entities for the implementation state control for their compliance with antitrust laws. In total, about 6,500 enterprises are included in the register (1999). The enterprises included in the register have the following distribution according to the principle of industry: 22% - housing and communal services, 13% - industrial and technical products, 28% - food products, 5% - consumer goods, 21% - certain types of work and services, 11% - economic entities belonging to the field of activity of natural monopolies (for natural monopolists in transport, communications and the energy complex, their own registers are compiled). Of the 6,500 enterprises included in the register, about 450 enterprises have a share of more than 35% in the commodity markets of the Russian Federation.

Studying the register, one can come to the conclusion that the Russian monopolists of the federal level are mainly highly specialized industries.
Their specificity lies in the fact that they were deliberately created by the state in the course of pursuing a policy of increasing concentration and deepening the specialization of production, and the systematic attachment of product suppliers to consumers. Economic crises showed that such industries are very unstable compared to more diversified ones.

In the Russian economy, such a phenomenon as
"local" monopoly. Due to the lack of market saturation, individual enterprises in the regions unwittingly find themselves in the position of monopolists. Such enterprises are engaged in the processing of agricultural products, trade and consumer services in sparsely populated remote areas.
Enterprises of housing and communal services are also local monopolies.

Natural monopolies occupy a special and significant place in the Russian economy. A natural monopoly is a monopoly in which the creation of a competitive environment in the commodity market, regardless of the level of demand, is impossible or economically inefficient at the current level of scientific and technological progress.

Three main natural monopolists in Russia:

· RAO "UES" (electricity generation, services for the transmission of electricity through high-voltage transmission lines);

· GAZPROM (transportation of gas through pipelines, sale of natural gas);

MPS ( rail transportation);

The role of these organizations in the economy is evidenced by the data in Table 4.1.

Table 4.1. The largest natural monopolies in the Russian economy in 2000.

Occupying only 4% of workers and employees, these three monopolies provide 13.5% of GDP, 20.6% of investments, 16.2% of profits, 18.6% of tax revenues of the consolidated budget of the Russian Federation. The role of Gazprom is especially great due to its export potential: it provides more added value than RAO UES and the Ministry of Railways combined, employing only 300 thousand employees, and profits and taxes are twice as much as they are. Obviously, this is a consequence of the extraction of significant natural rent, which

here is still underestimated due to low domestic gas prices. If these prices were increased by 3 times - then they would still be half the export price in the main European market - Gazprom's gross value added in 2000 would be about 1 trillion. rubles, i.e., twice as high as the reporting figure, and the profit is about 300-350 billion rubles, including rent - about 70%.

At present, part of the rent is redistributed through lower prices to other sectors, primarily to the electric power industry, which makes it possible to maintain lower tariffs for energy and heat, as well as to the population through cheaper public utilities. At the same time, the wages of state employees and pensions are kept low, increasing the differentiation of the population in terms of monetary income.

The role of Gazprom in the modern Russian economy is thus unique, especially in distorting relative prices, giving the wrong signals to market agents. Meanwhile, there is also a very widespread opinion that natural monopolies inflate prices, taking advantage of their monopoly position and lack of transparency. Their costs are high, and consumers are forced to pay for them. With regard to opacity and costs, this is absolutely true, although prices were really inflated only in certain periods, for example, in the energy sector until 1995, and in the Ministry of Railways - for transportation certain types cargo, such as export goods.

Given the huge role of natural monopolies in the economy and the public sector, it seems quite justified to consider and approve their investment programs in parliament together with the federal budget, and current costs - in the government, with the issuance of relevant directives to state representatives in these companies.

At the same time, consideration of their position should be unbiased, freed from the lobbying interests of other companies interested in low prices for gas, energy, and rail transportation. This is not the place to deal with their problems in detail, but one thing should be said, referring to other studies: the prices of natural monopolies are underestimated today, especially for gas.

This means the existence of a significant non-market sector in the Russian economy, the distortion of relative prices, the absence of real incentives for energy conservation and technical progress in this area. The manufacturing industries, contrary to illusions, gain practically nothing from this, since cheap resources are simply wasted. It is also better for the population to raise wages and pensions so that they, in turn, pay for services at full cost and can choose whether to spend more energy or save better in order to purchase other goods and services.

In order to reduce prices and tariffs, or at least stabilize them big hopes assigned to the reform of natural monopolies. This refers to the allocation of a competitive sector from them, where competition could help reduce market prices. In this regard, it must be said that such hopes, in my opinion, are exaggerated.

The only industry where the separation of a competitive sector is possible and where the reform can bring the expected effect is the electric power industry. Estimates show that the formation and privatization of generating companies will make it possible to reduce the share of state-owned assets in this industry by about 70–75%, while maintaining the necessary state regulation and reduce the share of the public sector in the Russian economy by about 6-7%. Bringing large consumers to the wholesale market, where there will be competitors to territorial energy companies, as well as reducing cross-subsidization will limit the increase in tariffs for industrial consumers to an average of 60-70 percent compared to 2002, and even less for large consumers. But for the population, housing and communal services, Agriculture, where today they use preferential tariffs, their growth can be 3-3.5 times in 3-4 years. This again raises the question of finding adequate compensatory measures.

As for the Ministry of Railways and Gazprom, the calculations on the effect of the development of competition in these industries look doubtful, at least without increasing costs. On the railway transport competition between freight operator companies on a single infrastructure is possible, but at the same time, a slowdown in the turnover of wagons is likely. This can only be avoided by forming strong companies that provide services for loading rolling stock. In addition, the lion's share of the costs will still be the cost of infrastructure remaining in the natural monopoly sector. An analysis of world experience shows that the American competitive option with many parallel routes owned by private companies is no longer feasible in our conditions. Other Options Included in Market Reform Projects railways, have proven to be ineffective everywhere. good examples so far almost none. The search should continue, but one cannot count on breakthrough results.

AT gas industry more opportunities, but one should take into account the concentration of unique reserves in a small number of nearby fields, which is why the creation of 3-4 mining companies on them is unlikely to lead to the emergence of a competitive market. Gas transportation also goes mainly in one direction. Independent producers have a chance mainly due to the production of associated gas or the development of new fields while ensuring free access to gas pipelines. This is what should be done. In addition, it is necessary to solve the painful problem of linking the cost of gas with the distance of its transportation.

Unbundling Gazprom as largest exporter currently hardly feasible. The paradox is that the creation of a competitive gas market in Russia is possible only with the exhaustion of the richest fields in the north of Western Siberia, when other, less profitable fields become competitive.

Thus, today it is possible:

1) separation of gas transportation from production within the framework of a monopoly like Transneft;

2) equal access to pipelines of all manufacturers at the cost of transportation depending on the distance, as it is now for independent producers;

3) equal access on a competitive basis to newly developed deposits.

The fourth natural monopoly can be called Rostelecom (long-distance and international telecommunication services).

St. Petersburg natural monopolies: PTS, Vodokanal,
Metropolitan, etc.

Regardless of whether the monopoly enterprise is natural or artificial, each of these enterprises has monopoly power, i.e. the ability to regulate the price of a product by restricting supply. Often, monopolists abuse this power in an attempt to restrict competition, and thus harm consumers. This phenomenon is called monopolistic activity, and this activity manifests itself in the form of price abuses.

Monopolist enterprises abuse their special position by setting either monopolistically high low prices. Right now in
In Russia, monopoly high prices are practiced, and in countries with developed competition - monopoly low, sometimes dumping. The monitoring of more than 200 prices showed that more than 1/3 of enterprises that occupy a dominant position in the market overestimate prices for goods and services.

As a rule, unreasonable expenses of enterprises are compensated by a monopoly high price.

An analysis of the costs of monopoly enterprises revealed two reasons for their growth:

1. lack of competitive pressure on the rate of return leads to weaker cost control;

2. The temptation to obtain monopoly excess profits can stimulate an increase in the costs of strengthening and protecting the monopoly position.

In the conditions of the modern Russian economy, monopoly market power is exercised primarily by inflating costs rather than generating additional profit, as evidenced by the excess of the index of labor costs and other production costs over the inflation index.

In addition to price abuses, there are examples of discriminatory behavior towards competitors in the Russian economy. For example, the administration of the Kirov region created a unitary state enterprise Kirovpharmacy, including previously independent pharmacies, Optika stores, a pharmaceutical factory, a pharmacy base and a control and analytical laboratory. The State Antimonopoly Committee saw this as a violation of the law “On Competition” and ordered the liquidation of the illegally created structure. After the reorganization of the enterprise, the assortment of medicines in pharmacies has expanded significantly, which can be regarded as an improvement in the position of the consumer due to the disaggregation of the monopoly enterprise.

To overcome the high degree of monopolization of the Russian economy and to develop competition, special government programs have been developed. The main objective of these programs was to reduce the concentration of production and create necessary conditions for the development of competition in the markets of the Russian Federation for priority groups of goods, as well as the diversification of production and an increase in the output of competitive products.
Studies show that the number of enterprises that do not feel competition is gradually decreasing and in many industries does not exceed 10-15%, only now reaching 20% ​​and more.

A special place in the problem of demonopolization of the economy belongs to the issue of reforming natural monopolies of national importance: RAO UES,
Gazprom and MPS. The general concept of reforms is the separation of monopoly activities from potentially competitive ones, a change in the price and tariff policy of monopoly enterprises.

Goals of reforming RAO UES: development of competition in electricity generation, creation of wholesale market electricity in those regions of the country where it is technically possible and economically feasible, as well as improving state regulation and control in the field of transmission and distribution of electricity.

Gazprom's reform is to separate gas transportation and distribution (monopoly activities) from production (potentially competitive). In addition, it is necessary to switch to contract prices and move away from the principle of pricing based on the costs of the closing producer.

The reform of the MPS involves three stages. 1st stage: Creation of cargo and passenger companies. 2nd stage: working out the relationship between the established companies, the Ministry of Railways and service users. Stage 3: division of infrastructure into repair and maintenance segments.

Each of the reform concepts has both supporters and opponents. But they all agree on one thing: reforms should be carried out gradually and they should not worsen the situation of enterprises, both in the domestic and foreign markets.

Achieving high performance results of the enterprise involves managing the process of formation, distribution and use of profits. Management includes profit analysis, profit planning, and a constant search for opportunities to increase profits.

Many enterprises have a division of economic services that are constantly analyzing the cost, looking for ways to reduce it in order to increase profits. But to a large extent, this work is provided by inflation and rising prices for raw materials and fuel and energy resources. In conditions sharp growth prices and lack of own working capital for enterprises, the possibility of profit growth as a result of cost reduction is excluded.

An increase in the volume of sales in physical terms, other things being equal, leads to an increase in profits. Increasing production volumes that are in demand can be achieved with the help of capital investments, which requires the direction of profits for the purchase of more productive equipment, the development of new technologies, and the expansion of production. This path is now difficult or almost impossible for many enterprises due to inflation, rising prices and the unavailability of long-term credit. An enterprise that has the means and capabilities to make capital investments actually increases its profits if it provides a return on investment above the rate of inflation.

It does not require capital expenditures to accelerate the turnover of working capital, which also leads to an increase in production volumes and product sales. However, inflation quickly depreciates working capital However, enterprises allocate an increasing part of them for the purchase of raw materials and fuel and energy resources, non-payments of buyers and the required prepayment divert a significant part of the funds from the buyers' turnover.

In general, Russian enterprises are characterized by a decrease in production volumes in recent years.

In this situation, it would seem logical to assume a sharp drop in the mass of profits. But the statistics show otherwise. With an increase in production costs and a decrease in the volume of its output, profits grow due to constantly rising prices. The increase in price in itself is not a negative factor. It is quite justified if it is associated with an increase in demand for products, an improvement in the technical and economic parameters and consumer properties of products.

Since profit from the sale of products occupies the largest share in the structure of balance sheet profit, the analysis of the factors that determine it is important to identify growth reserves for all balance sheet profit.

Under stable economic conditions of management, the main way to increase profits from the sale of products is to reduce the cost of costs. This is especially important for enterprises in the manufacturing industries, where the share of the cost of raw materials in the cost is significantly higher than in similar enterprises in developed countries, and the weight of waste is significant. In particular, in mechanical engineering, the share of metal waste in the total consumption of ferrous metals has consistently occupied more than 20% for many years, and the share of shavings in general education metal waste - 45%. This also indicates the use of obsolete equipment.

In the extractive industries, it is rather difficult to ensure profit growth as a result of a decrease in the cost of mining due to natural causes. This can mainly be achieved due to an increase in production volumes.

In industries oriented to the end consumer, the volumes of production and sales of products, determined by demand, the level of cost, but without compromising the quality of consumer goods, are of decisive importance.

The amount of profit from the sale of products is affected by the composition and size of unrealized balances at the beginning and end of the period. A significant amount of balances leads to incomplete receipt of revenue and shortfall in profits.

The reserve for increasing the balance sheet profit may be the profit received from the sale of fixed assets and other property of the enterprise. Previously, operations related to the disposal of fixed assets did not have a significant impact on financial results, now that enterprises have the right to dispose of their property, it makes sense to get rid of unnecessary and uninstalled equipment, having previously weighed what is more profitable - to sell it or rent it out.

Other transactions, such as the gratuitous transfer of fixed assets to an enterprise, are not included in the balance sheet income, but are reimbursed from the net income intended for accumulation.

Profit can be obtained from the sale of intangible assets that are in demand in the market. Their selling price is determined by the ability to generate income. To calculate profit, the sale price excludes the costs associated with the creation or purchase of intangible assets, taking into account the costs of bringing them to a state in which they are able to generate income.

In addition to the factors of increasing the volume of production, increasing prices for promoting products to unfilled markets, the problem of reducing the costs of production and sale of these products, and reducing production costs is inexorably put forward.

In the traditional view, the most important ways to reduce costs are saving all types of resources consumed in production: labor and material.

So a significant role in the structure of production costs is wages. Therefore, the task of reducing the labor intensity of products, increasing labor productivity, and reducing the number of administrative and maintenance personnel is relevant.

Reducing the labor intensity of products, increasing labor productivity can be achieved different ways. The most effective of them are the mechanization and automation of production, the development and application of progressive, high-performance technologies. However, some measures to improve the applied equipment and technology will not give the proper return without improving the organization of production and labor.

Material resources occupy up to 3/5 in the structure of production costs. This explains the importance of saving these resources, their rational use. At the forefront here is the use of resource-saving technological processes. It is also important to increase the exactingness and widespread use of incoming quality control of raw materials, components and semi-finished products coming from suppliers.

Reducing the cost of depreciation of fixed assets production assets can be achieved by better use of these funds, their maximum utilization. At foreign enterprises, such factors as reducing production costs are also considered, such as determining and maintaining the optimal size of a batch of purchased materials, the optimal size of a series of products purchased for production, deciding whether to produce or purchase individual components or components from other manufacturers.

It is known that the larger the batch of purchased raw materials, the greater the value of the average annual stock and the greater the amount of costs associated with the storage of these raw materials. However, the acquisition of raw materials and materials in large quantities has its advantages. The costs associated with placing an order for purchased goods, with the acceptance of these goods, monitoring the passage of invoices, etc. are reduced. Thus, the task arises of determining the optimal amount of purchased raw materials and materials in order to avoid unnecessary costs and increase profits.

The same rules apply when determining the optimal size of a launch product series. When manufacturing products in a significant number of small batches, warehousing costs finished products will be minimal, thereby increasing profits.

In combination with traditional ways to reduce production costs, the newly emerged factors will allow, in combination, to bring the value of production costs to an optimal level, hence increasing profits.

Profits may increase as a result of an increase in production, an increase in specific gravity products with higher profitability, reducing the cost of production, increasing wholesale prices, while improving the quality of products.

The product range has a direct impact on profits. When changing the structure of the assortment in the direction of increasing the share of products with higher profitability, an additional increase in profit is provided.

Among the factors influencing the increase in profits, the leading role belongs to the reduction in the cost of production. The choice of ways to reduce current production costs is based on an analysis of the cost structure. For material industries, the most characteristic way is to save material resources, for labor-intensive industries - to improve the use of fixed capital, for energy-intensive ones - to save fuel and electricity.

In the production of higher quality products, operating costs often increase. However, as a result of the sale of these products at higher prices, profits also increase.

The most important question management of the profit planning process is the planning of profits and other financial results.

main goal when planning is the maximization of income, which allows you to provide financing for a larger amount of the needs of the enterprise in its development. In this case, it is important to proceed from the amount of net profit. The task of maximizing the net profit of an enterprise is closely related to optimizing the amount of taxes paid within the framework of the current legislation, and preventing unproductive payments.

The object of planning is the planned elements of balance sheet profit, mainly profit from the sale of products, performance of work, provision of services. The basis for the calculation is the volume production program, which is based on consumer orders and business contracts.

Profit planning is an integral part financial planning and an important area of ​​financial and economic work at the enterprise. Profit planning is carried out separately for all types of enterprise activities. Not only does this make planning easier, but it also matters for the expected amount of income tax, since some activities are not subject to income tax, while others are taxed at higher rates. There are many different tax incentives, among which it should be noted the exemption from taxation of the costs of enterprises to finance capital investments for production and non-production purposes; the cost of repaying bank loans received and used for these purposes, as well as the amount of contributions to charitable purposes.

In the process of developing plans for profit, it is important not only to take into account all the factors affecting the amount of profit, but also, having considered the options for the production program, to choose the one that provides the maximum profit.

6. Conclusion

Obviously, the main result of competition is the expansion of production, the improvement of its technology and organization, the improvement in the quality of goods, the reduction in the cost of producing a unit of output, which makes it possible to reduce prices, increase the range of goods, and improve customer service. On this occasion, the Nobel Prize winner F. von Hayek said that societies that rely on competition achieve their goals more successfully than others and that it is competition that shows how to produce things more efficiently. Thus, competition is the engine of economic progress.

But competition cannot be idealized. Competitive relations are always associated with the need for a constant struggle for Better conditions existence. As a result of this struggle, there are not only winners - companies that increase their wealth, but also losers. Such negative phenomena as ruin, impoverishment of a certain part of the population, unemployment, instability, social injustice, inflation, etc. are associated with competition.

History has shown that competition in its purest form, in its perfect form, is impossible. Therefore, the state is forced to intervene in the economy, giving competition "imperfect", artificial features.

7. List of used literature

1. Grebennikov P.I., Leussky A.I., Tarasevich L.S. Microeconomics. SPb.: SPbUEF Publishing House, 1996
2. Course of economic theory. / Ed. A.V. Sidorovich. M., Moscow State University, 1997.
3. Microeconomics. Theory and Russian practice: [Electronic resource] : Proc. for university students studying in economics. specialties and directions / [A.G. Gryaznova, A.Yu. Yudanov, O.V. Karamova and others]; Ed. A.G. Gryaznova and A.Yu. Yudanov; Financial acad. under the Government of Russia. Federations
4. Yudanov A. History and theory large enterprise(view from Russia). // World economy and international relationships. 2001. № 7.

5. Microeconomics: Proc. for university students studying in economics. specialties and directions / V.M. Galperin, S.M. Ignatiev, V.I. Morgunov; Tot. ed. V.M. Galperin; Institute of Open Island

6. Course of economic theory: Textbook / Ed. Chepurina M. N., Kiseleva E. A. - Kirov, ASA, 2004.

7. Yu. Kuznetsov - Monopoly and competition policy Issues of Economics - 2006. - No. 5

8. Iokhin V.Ya. Economic theory: Textbook - M .: Economist, 2005

Profit maximization under imperfect competition (pure monopoly, monopolistic competition)

With imperfect competition, as the number of products that appear on the market increases, the price of it gradually falls. We can say that each subsequent unit of the firm's product under such conditions is sold at a lower price than the previous one. This suggests that the monopoly firm is not interested in producing an arbitrarily large number of products, since this can significantly reduce the price of its products, which will put the company in an unfavorable economic position. The firm cannot also limit its output by significantly raising the price. With a high price on the market, these goods may not find their buyer at all. Consequently, monopoly enterprises are forced to seek a position in the market that will enable them to maximize their profits at a certain volume of output and an appropriate price. Having specified certain data on the work of the monopolist firm, we will analyze the process of formation of total income, marginal and average income, and then compare them with total costs (Table 1)

When analyzing the above data, it can be seen that as a result of a constant price decrease, total income (TR) first increases from 0 to 25, and then begins to decrease, since the price decrease is no longer compensated by the increase in output.

According to Table 1, we construct the curves of total income (TR), total costs (TC), average income (AR) and marginal income (MR) - fig. one

The constant decrease in price has another consequence - this is the decreasing nature of the average and marginal incomes. Indeed, in conditions of imperfect competition, each additional unit of product sold brings an average income of less than the previous one. Figure 1 shows the decreasing nature of AR and MR, with MR decreasing at a faster rate than AR, although initially at a minimum output (change in Q from 0 to 1) they are equal. The mean income is zero when the total income is also zero, while the MR crosses the x-axis at the maximum TR.

Combining the graph of total costs and total income, three sectors can be distinguished. In the first, TC exceeds TR, so the firm has a negative profit, or incurs a loss (Fig. 1a). At point A, with an output of two units, TR = TC, so the total profit is zero. The firm begins to make a profit as soon as total revenue exceeds total costs. As the latter increase, the difference between TR and TC, having reached its maximum, begins to decrease, and at point C returns to zero. With a further increase in production, the firm again suffers losses.

When analyzing the work of a particular firm, we showed that profit is maximized under the condition that MR = MC. This rule also applies to a monopolist. Table 1 shows that TPr reaches its highest value at four units of production. It is at this point that the value of MC is closest to MR, and on the graph (Fig. 1a), the slope of the tangent at point B is equal to the slope of the tangent to the curve of total costs at point C. Therefore, it is at this volume that the firm, in conditions of imperfect competition, maximizes your profit.

This approach to determining the profit maximization point is not the only one. With this approach, the analysis of many indicators of the firm's performance remains behind the scenes, in particular, indicators of average values, such as average total costs and average variable costs, are not used. There is no possibility of analyzing the behavior of the firm with a changing price, which is very important for a monopoly firm. Determining the maximum point of a firm under imperfect competition by comparing the total income and costs of the firm does not answer what the price will be.

A more detailed analysis of the work of the company occurs with a different approach, when the profit maximization point is determined through the marginal and average values ​​that characterize the activity of the enterprise in a changing market environment.