The influence of the monopoly on the country's economy at all times of its existence was enormous. Moreover, the impact could be both positive and negative. Given the imperfection of certain provisions of the legislation relating to the sphere of management, the study of monopolies is always very relevant.
Definition
Monopolies in the economy are large companies that control the production and sale of one or more types of goods. Their presence excludes the possibility of competing. The conditions of a monopoly in the economy block access to other enterprises.
Causes of occurrence
Why does monopoly appear? In the areas of the economy there are various factors that determine the emergence of such enterprises. The main reasons include:
- The ability to receive more income due to the lack of consumer choice.
- The concentration of production and capital.
- Lack of competitors.
- The centralization of capital is the "takeover" of a number of small enterprises.
- The ability to implement major foreign economic programs.
Classification
There are several forms in which a monopoly in the economy can exist. It:
- State enterprise. Such companies are established legally. Normative acts formulate the limits, the order of their activities.
- Natural monopoly. In a market economy, there is a state of the system in which the satisfaction of consumer demand will be more effective in the absence of competition. This is mainly due to the peculiarities of production technology. At the same time, products that are produced at the enterprise cannot be replaced by other goods. In this regard, the demand for products manufactured by the company will be less dependent on changes in their value than is characteristic of other products.
- An open monopoly in the economy is a situation when a new technology has arisen, but it has not yet been sufficiently mastered. Therefore, its implementation is carried out at the initial stages, as a rule, by one large enterprise.
The role of monopoly in the Russian economy
Enterprises of this type carry out the most important functions in the Russian Federation. The role of monopoly in the Russian economy is manifested in the fact that the country's competitiveness in the international arena largely depends on the state of the company. In addition, internal security of the state with manufactured goods is of no small importance. The latter is due to the fact that the manufactured products are consumed by the whole society. Large monopolistic enterprises provide energy, gas, and water supply, provide transport services, including railways, air, and provide communication and communication systems. All these products are consumed by the population. One of the main features that distinguish any monopoly in the economy is the establishment of a high entry barrier to the industry of specialization. If there is a single producer whose effect on production volume is huge, the amount of capital is formed, which will make other enterprises competitive. In society, as a rule, there is no way to withstand more than one such company.
Federal Law No. 147
This Law provides a list of industries in each of which one monopolist enterprise may operate. These include:
- Transportation of gas, oil and its products through pipelines.
- The provision of heat and electricity transmission services.
- Railway transportation.
- Terminal services (transport, airports).
- Providing operational dispatch control in the electric power industry.
- Services for the operation of the infrastructure of waterways
From this list, the enormous role of monopoly in the economy becomes clear. These sectors affect the most important aspects of the life support of the population. The essence of a monopoly in the economy is the continuous supply of essential goods, keeping prices at the optimal level. Among the most well-known companies operating in the Russian Federation in this direction, it should be noted such OJSC as:
- Gazprom
- "RUSSIAN RAILWAYS".
- Transneft
- FGC UES.
Specificity
A monopoly in the economy is a company in which:
- Activities to a greater extent involve the provision of services designed for a wide range of users (consumers).
- Large amounts of money are involved in financing.
Undoubtedly, the activities of such enterprises should be regulated by the state. First of all, at the legislative level, certain limits are set for the pricing of services. Billing should be carried out in such a way that the product is available to all consumers. In addition, for such enterprises, as well as for the rest, there is an obligation to make tax deductions to the budget.
pros
The monopolist enterprise gets the opportunity:
- Make the most of the effect of the scale of our own production. This helps to reduce the cost of production per unit of output.
- To mobilize significant financial resources to maintain the production line at an optimal level.
- Use the achievements of NTP.
- Follow uniform standards for the services provided and products.
- Replace the market mechanism with an intra-company hierarchical structure, a system of contractual relations. This contributes to a significant reduction in losses associated with uncertainty and risk.
Minuses
The negative aspects of the activity of monopolists are manifested in the presence of their ability:
- Set the level of selling value. This creates the temptation to shift a significant share of the cost to the consumer. Moreover, the latter cannot have a reverse effect on the enterprise.
- Block technical improvement of production.
- Save due to deterioration in the quality of services and products.
- To take the form of "administrative dictatorship", thereby replacing the existing mechanism of competition.
findings
As can be seen from the above lists, the advantages of monopolistic enterprises can become disadvantages, as well as vice versa. This allows us to conclude that this form of management is very contradictory. It is extremely problematic to determine what outweighs the pros or cons. Meanwhile, the population cannot live long in uncertainty and dependence on a monopoly. The current system can neither weaken, nor even overcome the negative role of monopoly in the economy. Despite this, such enterprises today act as the main investment generators.
State regulation
It can be carried out in different ways. In particular, there is price regulation, which includes methods:
- The average cost.
- Price cap setting. When using this method, users are determined who are subject to mandatory service. For them, a minimum level of security is established in case of impossibility to satisfy the needs in full.
- Subsidies. This method is called the method of price discrimination. It assumes that one consumer is provided with discounted products at the expense of other users.
Non-price state regulation also applies. It:
- Preliminary control. It involves the mandatory provision of a request for consent to conclude any transaction or other information at the request of authorized bodies.
- Follow-up control. It is a mandatory notification to the regulatory body of the actions taken.
Tariff freeze
This measure was adopted at the government level in 2013. At the same time, in the first year of the decree's validity, tariffs did not increase, and in the next 2 years, inflation was indexed in the previous period. Meanwhile, the monopolists said that they would be forced to reduce investment programs. This, in turn, will negatively affect the state of a number of industries. In addition, at the beginning of the introduction of such a measure, enterprises indicated the likelihood of structural changes. So, it was a question of staff reduction (in the managerial staff), refusal from indexation of salaries (except for production employees). According to Gazprom’s estimates, in 2013, if the tariffs are frozen for the next 3 years, the enterprise may lose 510 billion rubles in revenue. At the same time, the investment program is projected to decrease by 407 billion rubles.