The concept of monopoly was known to people in antiquity. Today, in an era ruled by market relations, it is useful to know what a monopoly is. It refers to the situation on the market when a single company produces certain products or provides a service that has no analogues, and the appearance of competitors in the industry is impossible.
At the same time, buyers have no choice, they are forced to purchase products only from a monopolist company. As a rule, absolute monopoly is an abstract concept, since in the complete absence of competitors, their presence in other countries is not ruled out.
Having understood what a monopoly is, let's look at the diversity of its types:
- closed, protected from competition by legal restrictions;
- a natural monopoly is a large company that produces products with lower costs than several small companies;
- an open monopoly is not protected from competition; in this case, the company is a temporary unique supplier of any product.
This classification is rather arbitrary, because some companies may relate to different types of monopoly at the same time. Examples are gas or telephone companies.
Let us now consider what a monopoly is, taking into account the time horizon. Monopoly planning can be short, medium or long term. For example, with the help of a patent certificate, a firm receives a closed monopoly for a short time period. This happens not only because of the limited patent validity period, but also because of the possibility of competitors inventing new products.
There is also a bilateral monopoly on the labor market. This is a situation in which there is only one seller on the supply side and the only buyer on the demand side. In such conditions, the volume of goods and prices are determined by the parties during the negotiations. An example of such a monopoly is the bakery, the only one in the city for which flour is produced by a single flour mill.
A monopoly in the labor market can be represented in a situation in which the employee is talented and has unique abilities. In this case, monopoly is a manifestation of market power on the part of the supply of labor. For example, a musician or writer, possessing copyright, acts as a temporary monopolist. The longer copyright lasts, the more significant is the income from the product of his mental efforts.
What is a monopoly in Russia and what are its features? The first monopolies in our country arose at the end of the 19th century, among which was the Union of Rail Manufacturers, which carried out the construction of railways. After the October
Revolution of 1917 , the monopolies were liquidated. Now in Russia, a new form of this phenomenon stands out - formal-corporate. It is characterized by a large number of shareholders, and the main role in the fate of the company, as a rule, is played by managers.