Market Monopolization is a situation in the economy when one or several large producers or sellers have an overwhelming advantage in the market in the production and sale of a certain range of goods, which leads to monopolization of prices and the establishment of a dictate in the market.
Dictionary of business terms. Academic.ru. 2001.
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You need to start by defining a monopoly.
Monopoly is a situation in the market in which such a monopoly firm operates, producing goods (s) and / or providing services that do not have close substitutes.
The first monopolies in history were created from above by state sanctions, when one firm was given the privileged right to trade in this or that product. With a pure monopoly on the market, there is only one seller. It could be state organization, private regulated monopoly or private unregulated monopoly. In each case, the pricing is formed differently.
A state monopoly can use price policies to pursue a variety of goals: for example, set a price below cost if the product has essential for buyers who are unable to purchase it at full price. The price can be set to cover costs or generate good returns. Or it may be that the price is set very high in order to reduce consumption in every possible way. In the case of a regulated monopoly, the government allows the company to set rates that provide a “fair rate of return” that will enable the organization to maintain production and, if necessary, expand it.
Conversely, in an unregulated monopoly, the firm itself is free to set whatever price the market can bear. However, for a number of reasons, firms do not always ask for the highest possible price. Fear of the introduction of state regulation, reluctance to attract competitors, or a desire to quickly penetrate - due to low prices - to the entire depth of the market can play a role here. The monopoly controls the market sector it occupies in whole or to a large extent. The antimonopoly legislation of many countries considers it a monopoly position for one firm to occupy 30-70% of the market and provides for such firms with various sanctions - price regulation, forced division of the firm, heavy fines, etc.
Types of monopolies:
- 1) Natural monopoly - a firm whose average costs for a long period decrease over the entire range of demand due to increasing returns to scale, is a natural monopoly. Thus, one firm can satisfy the entire market demand for a product at a lower average cost than would be possible if two or more competing firms supplied exactly the same amount of the product.
- 2) State monopoly - a state monopoly on the production and sale of consumer goods (tobacco, salt, etc.). It can be complete if the state monopolizes both production and sale of goods, or partial if only production or only sale is monopolized.
- 3) Pure monopoly - a position in the market for goods and services, characterized by the presence of only one seller of a given type of product or service. Characteristic features This situation is: uniqueness of the product, ownership of basic raw materials, low average costs, patent rights, special privileges (licenses). Pure monopolies usually arise where there are no alternatives to a given product or service, and there are no close substitutes.
A pure monopoly is characterized by a high level of prices, the further growth of which is constrained only by the risk of a decrease in demand.
Also, there are other types of economic entities with a privileged position in the market:
4) Oligopoly - type market structure imperfect competition dominated by an extremely small number of firms. Examples of oligopolies include passenger aircraft manufacturers such as Boeing or Airbus, car manufacturers such as Mercedes, BMW, and others.
Likewise, oil-producing countries have united in the "OPEC", often referred to as a cartel.
An oligopoly with two members is called a duopoly.
The oligopolistic market consists of a small number of sellers who are highly sensitive to each other's pricing policies and marketing strategies. Products may be similar (steel, aluminum), or not similar (cars, computers). The small number of sellers is due to the fact that it is difficult for new applicants to penetrate this market. Each salesperson is sensitive to the strategy and actions of competitors. For example, if a steel company lowers prices by 10%, buyers will quickly switch to that supplier. Other steel producers will have to respond either by lowering prices as well or by offering more or more services. An oligopolist is never confident that he can achieve any long-term result by lowering prices. On the other hand, if the oligopolist raises prices, competitors may not follow suit. And then he will have to return to the previous prices, or risk the loss of clientele in favor of competitors.
- 5) A trust is one of the forms of monopolistic associations, within the framework of which the participants lose production, commercial, and sometimes even legal independence. Real power in a trust is concentrated in the hands of the board or the parent company.
- 6) Cartel is a form of monopoly association or agreement. Unlike other, more stable forms of monopolistic structures (syndicates, trusts), each enterprise that entered the cartel retains financial and production independence. The objects of the agreement can be: pricing, spheres of influence, terms of sale, use of patents, regulation of production volumes, agreement on terms of sales of products, hiring workers. As a rule, it operates within the same industry. Hinders the functioning of market mechanisms. In a number of countries (where cartels are prohibited) is subject to antitrust laws; in other countries, on the contrary, the creation of cartels is encouraged in order to restructure the industry, standardize materials and components, and limit competition between small firms.
- 7) A syndicate is an organizational form of a monopoly association in which the companies that have entered into it lose their commercial marketing independence, but retain their legal and industrial freedom of action. In other words, in a syndicate sales of products, distribution of orders is carried out centrally.
There are other monopolies, but I decided to highlight the main and most common types.
It should also be noted that there are huge and sometimes insurmountable barriers to entry into a monopolized sector of the economy, such as:
- 1) Economies of scale - an economic pattern, according to which the total costs of production per unit of output over a long period of time fall as the volume of output increases. The economies of scale come from the following. First, as the volume of production increases, fixed costs spread to more and more products. Second, as the size of the enterprise increases, it becomes possible to specialize labor, as a result of which workers work more productively. Third, the savings are due to a more complete use of fixed assets.
- 2) Legal restrictions: patents, tariffs and quotas in international trade.
- 3) High entry costs - economic barriers. In some industries (such as the aircraft industry) it can be very expensive to start production.
- 4) Control by the monopolist of the sources of supply of the necessary raw materials or other specialized resources.
- 5) Advertising activities. It helps build confidence and respect among buyers towards well-known brands, thereby increasing barriers to entry.
Thus, the existence of monopolistic associations has a beneficial effect on the development of the economy. At the same time, monopolies have the ability to:
- · Increase their profits by raising prices without reducing production costs;
- · “Exploit” consumers by raising prices against their equilibrium level;
- · Weaken or even eliminate competition together with its beneficial effect on production efficiency, product quality, and the level of production costs.
The main regulator of the market economy is the ratio of supply and demand... As a rule, the number of consumers and producers of goods, especially those of mass demand, is quite large in the real economy.
If the goods are by their nature product of narrow application, then the number of its manufacturers is limited, and the possibility of market monopolization increases. It also increases with consolidation of producers on the basis of mergers, acquisitions or mergers of enterprises, the creation of associations, collusion, etc.
The number of producers and their behavior is influenced by the conditions for the formation of the market, the efficiency of production and sale of goods, the efficiency of reproduction processes at large, medium and small enterprises.
The number of market participants for a particular product may also be limited. efficiency of its production at individual enterprises or the behavior of individual firms in the market.
In a classical market economy, which generally corresponds to “ free competition market», Commodity producers and sellers enter into a competition to increase sales. Success in it provides an increase arrived. Competitive fight is objective driving force economic development.
In conditions of perfect competition, the desire to increase profits creates incentives to increase production volumes, improve the quality of goods, which means more complete satisfaction of consumer requirements, raises incentives to saturate the market.
Restriction of competition ( imperfect competition) leads to market monopolization, creates benefits for individual producers. As a result, the quantity of goods decreases, there is an unreasonable increase in prices, and the quality of products decreases.
Market monopolization limits the ability to purchase goods, negatively affects the satisfaction of needs, violates the rights of consumers.
Monopolization of markets largely depends on the degree of state regulation of economic processes and the national economic efficiency of monopolization or demonopolization of markets. At each moment of time, their mutual influence may be different.
For example, centralized economy led to the exclusion of competition as a factor of economic growth. The result of this was the accumulated low competitiveness of domestic goods in the domestic and foreign markets, a slowdown in the technological development of production and a technological backwardness, which are still manifested at the present time.
Free competition provides for a significant number of producers. This means an economic development orientation medium and small business, which has the advantage of meeting the needs of the markets quickly enough. However, technological update small businesses are associated with high capital costs, which are difficult for small and medium-sized businesses.
Wide use credits for the technical development of production for a significant number of small enterprises leads to subsequent financial difficulties that can lead to bankruptcy.
Monopolization of markets- an objective economic trend arising in the depths of commodity production and reflecting the interests of large commodity producers. It has negative consequences for meeting the needs of society. The purpose of monopolies- restriction of competition in order to obtain monopoly high profits at the expense of consumers.
INTRODUCTION ................................................. .................................................. ...... 3
I. THEORETICAL PART .............................................. .............................. 4
1.1. The concept of monopoly ................................................ ................................. 4
1.2. Types of monopoly ................................................ ...................................... 4
1.3. The reasons for the existence of monopolies ............................................... ....... 7
1.4. Monopoly Pricing and Monopoly Issuance ............................ 8
1.5. Costs and Efficiency of Monopolies .............................................. ... nine
1.6. Natural monopoly ................................................ ........................ 13
II. ANALYTICAL PART ................................................ ....................... eighteen
2.1. International monopolies ................................................ ................. eighteen
2.2. State control over monopolistic activities in advanced economies ........................................ ............................................ eighteen
2.3. Natural monopolies in the Russian market and their reform ... 20
2.4. Tariff regulation of natural monopolies and the impact on efficiency .......................................... .................................................. ............................ 25
2.5. Prospects for the restructuring of natural monopolies and the impact on the efficiency of the economy ......................................... .................................... 31
2.6. The presence of natural monopolies in the Russian market. Their share, impact on the national economy ........................................... .................................. 33
2.6.1. Regulation of the activities of natural monopolies ................. 33
2.6.2. Maximizing the level of production .............................................. 34
2.7. Ensuring self-sufficiency ................................................ .............. 35
2.8. Reforming the structure of Russian natural monopolies ... 36
2.9. National or private? .............................................. ................... 38
CONCLUSION................................................. ................................................ 40
LIST OF USED LITERATURE .......................................... 42
INTRODUCTION
If we pay attention to monopolistic formations, then these are separate large enterprises, associations of enterprises, economic partnerships that produce a significant amount of products of a certain type, due to which they occupy a dominant position in the market; get the opportunity to influence the pricing process, seeking the most favorable prices for themselves; get higher (monopoly) profits.
Consequently, the main feature of a monopoly formation (monopoly) is the occupation of a monopoly position. The latter is defined as the dominant position of an entrepreneur, which gives him the opportunity, alone or together with other entrepreneurs, to restrict competition in the market for a particular product.
A monopoly position is desirable for every entrepreneur or enterprise, because it allows you to avoid a number of problems and risks associated with competition: to take a privileged position in the market, concentrating in their hands a certain economic power; influence other market participants, impose their own conditions on them. It can be considered that monopolists impose their personal interests on their counterparties, and sometimes on society.
Therefore, in this paper I would like to consider the monopolization of the market and the impact on the Russian economy. Natural monopolies occupy a special place in this work. Natural monopoly occurs when economies of scale accompany output above the required level. In this case, for any volume of output, the costs are minimal when the product is produced by a single firm. In other words, for any volume of output, an increase in the number of manufacturing firms leads to a decrease in the output of each and to an increase in average total costs. Thus, in the work we will be convinced of the inefficient output and the non-equilibrium price of the monopolist. Therefore, monopoly is ineffective from the point of view of society. Within the framework of the problem under discussion, I would like to note in the work such aspects of the study as the concept of monopoly and its importance on the economy (social costs), the concept of natural monopoly and the impact on the Russian economy, as well as the possible reform of monopoly structures to achieve efficiency.
I. THEORETICAL PART
1.1. Monopoly concept
Before starting to consider this topic, you should consider the concept of monopoly and the essence of monopoly power in the market.
Monopoly is a firm that is the only supplier of a product that does not have close substitute products. A firm has a monopoly if it is the only supplier of a product that has no close substitute products. The main reason for the emergence of a monopoly is barriers to entry into the market, which prevent other firms from competing with the monopolist. Market entry barriers, in turn, arise in the following cases:
The key production resource is owned by a single firm.
The government has granted exclusive rights to the production of some products to one firm.
The production costs are such that maximum production efficiency is possible with a single manufacturer on the market.
The objective basis of monopoly is the dominant position of an economic entity in the market, which allows it to exert a decisive influence on competition, overcharge and reduce the volume of production in comparison with the theoretically possible level, and hinder market access for other business entities. Ultimately, this makes it possible for the monopolist to redistribute effective demand in its favor, to receive monopoly high profits. Competitive markets generally perform well, which is not the case for markets in which either buyers or sellers can manipulate prices. In a market where one seller controls supply, output will be low and prices high. Monopoly is an extreme form of imperfect competition. The seller has monopoly power if he can raise the price of his product by limiting his own output. In monopoly markets, there is an entry barrier that makes it impossible for any new seller to enter the market. A firm with monopoly power pursues a policy of price discrimination, that is, it sells the same product to different groups of consumers at different prices. But for this, the monopoly firm must be able to reliably divide its market, focusing on different elasticities of demand for different consumers, and skillfully separate the “cheap” market from the “expensive” one.
1.2. Types of monopoly
The type of monopolies depends on the market structure and the form of competition.
There are different types of monopolies, which can be classified into three main ones: natural, administrative and economic .
Natural monopoly arises due to objective reasons. It reflects a situation where the demand for a given product is best met by one or more firms. It is based on the features of production technologies and consumer services. Here competition is impossible or undesirable. Examples include power supply, telephone services, communications, etc. These industries have a limited number, if not the only national enterprise, and therefore, naturally, they have a monopoly position in the market.
Administrative monopoly arises from the actions of government agencies. On the one hand, this is the granting to individual firms of the exclusive right to perform a certain type of activity. On the other hand, these are organizational structures for state-owned enterprises, when they unite and are subordinate to different chapters, ministries, associations. Here, as a rule, enterprises of the same industry are grouped. They act on the market as one economic entity and there is no competition between them. The economy of the former Soviet Union was one of the most monopolized in the world. It was the administrative monopoly that was dominant there, above all the monopoly of all-powerful ministries and departments. Moreover, there was an absolute state monopoly on the organization and management of the economy, which was based on the dominant state ownership of the means of production.
Economic monopoly is the most common. Its appearance is due economic reasons, it develops on the basis of the laws of economic development. We are talking about entrepreneurs who have managed to gain a monopoly position in the market. There are two paths leading to it. The first is the successful development of an enterprise, a constant increase in its scale through the concentration of capital. The second (faster) is based on the processes of centralization of capital, that is, on a voluntary merger or takeover by the winners of bankrupts. In one way or another, or with the help of both, the enterprise reaches such a scale when it begins to dominate the market.
What is the reason for the emergence and development of monopolistic tendencies? There are two points of view on this issue in the economic literature. According to the first, monopoly is interpreted as accidental, not characteristic of the market economy. As for the other point of view, monopolistic formations are defined as natural. One of the prefers of such views is the English economist A. Pigou. He insists that "monopoly power does not arise by accident." It is the logical culmination of the enterprise strategy. To paraphrase a well-known expression, we can say that all roads lead to monopoly. The principle of economic benefit, formulated by A. Smith, makes enterprises constantly look for opportunities to increase their profits. One of them, the most attractive and reliable, is the creation or achievement of a monopoly position. Thus, we can conclude that monopolistic trends in the economy follow from the law of profit maximization.
Another driving force behind the actions of entrepreneurs in this direction is the law of concentration of production and capital. As you know, the operation of this law is observed at all stages of the development of market relations. Competition is its driving force. To survive in such a struggle, to get big profits, entrepreneurs are forced to introduce new technology and increase the scale of production. At the same time, several larger ones are separated from the mass of medium and small enterprises. When this happens, the largest entrepreneurs have an alternative: either to continue unprofitable competition among themselves, or to come to an agreement on the scale of production, prices, sales markets, etc. As a rule, they choose the second option, which leads to the emergence of collusion between them, which is one of the main signs of monopolization of the economy. Thus, the conclusion suggests itself that the emergence of monopoly enterprises is due to the progress of productive forces, the realization of the advantages of a large enterprise over a small one.
Modern theory identifies three types of monopolies:
1) monopoly of an individual enterprise;
2) monopoly as an agreement;
3) monopoly based on product differentiation.
Achieving a monopoly position in the first way is not easy, as evidenced by the very fact that these entities are exclusive. In addition, this path to monopoly can be considered "decent", since it provides for a constant increase in the efficiency of activities, gaining an advantage over competitors.
More accessible and widespread is the way of agreement between several large firms. It makes it possible to quickly create a situation where sellers (manufacturers) act on the market as a “united front”, when the competition, primarily the price struggle, is brought to naught, and the buyer finds himself in uncontested conditions.
There are five main forms of monopolistic associations. Monopolies monopolize all spheres of social reproduction: directly production, exchange, distribution and consumption. On the basis of monopolization of the sphere of circulation, the simplest forms of monopolistic associations arose - cartels and syndicates.
Cartel - this is the union of several enterprises of the same sphere of production, the participants of which retain ownership of the means of production and the produced product, production and commercial independence, and agree on the share of each in the total volume of production, prices, sales markets.
Syndicate - this is an amalgamation of a number of enterprises of one industry, the participants of which retain funds for the means of production, but lose ownership of the produced product, which means they retain production, but lose commercial independence. For syndicates, the distribution of goods is carried out by a general sales office.
More complex forms of monopolistic associations arise when the process of monopolization extends to the sphere of direct production. On this basis, such a higher form of monopoly associations as a trust appears.
Trust - This is an amalgamation of a number of enterprises in one or several industries, the participants of which lose ownership of the means of production and the produced product (industrial and commercial independence). That is, production, sales, finance, management are combined, and for the amount of invested capital, the owners of individual enterprises receive shares of the trust, which give them the right to take part in the management and appropriate the corresponding part of the profit of the trust.
Diversified concern - this is an association of tens and even hundreds of enterprises of various industries, transport, trade, whose members lose ownership of the means of production and the manufactured product, and the main company exercises financial control over other members of the association.
In the 60s, capital appeared and began to develop in the USA and some countries. conglomerates , that is, monopolistic associations formed by absorbing the profits of diversified enterprises that do not have technical and production unity.
Experience shows that monopolies, having monopolized a certain industry and seized strong and monopoly positions, sooner or later lose the dynamics of development and efficiency. This is explained by the fact that the advantages of large-scale production are not absolute, they bring an increase in profitability only up to certain times.
In general, any monopoly can exist only with imperfect competition. The monopoly market assumes that a given product is produced by only one firm (the industry is made up of one firm) and that it has very high control over prices.
The market is more loyal to the oligopoly, which can be subdivided into two types: the oligopoly of the first type - these are industries with exactly the same products and a large size of enterprises. Oligopoly of the second kind is a situation when there are several sellers selling differentiated goods. In this case, there is partial control over prices. The market of monopolistic competition with product differentiation assumes that the buyer prefers a certain type of product: he is attracted by this particular variety, quality, packaging, trade mark, level of service, etc. Signs of such a market: many manufacturers, many real or imagined differences in products, very weak price control.
1.3. The reasons for the existence of monopolies.
There are several reasons for the existence of monopolies.
First reason: "Natural monopoly". If the production of any volume of output by one firm is cheaper than the production of two or more firms, then the industry is said to be a natural monopoly. And the reason here is economies of scale - the more products are produced, the lower their cost.
The second reason : a single firm has control over some rare and extremely important resources, either in the form of raw materials, or in the form of knowledge protected by a patent or kept secret. Example: De Beers diamond monopoly relies on control over rough; Xerox controlled the process of making copies, called xerography, because it had knowledge in the field of technologies, in some cases protected by patents.
Third reason: state restriction. Monopolies exist because they buy or they are given the exclusive right to sell some good. In some cases, the state reserves the right to a monopoly; in a number of countries, only state monopolies can sell tobacco.
1.4. Monopoly pricing and the release of a monopolist
In this part, we will clearly show the traditional pricing of monopoly in order to understand the mechanism of regulation of monopoly prices and the reaction of monopolists.
Figure 1.1. shows the short-term curves of the average and marginal costs of the monopoly firm. The demand for the product of the monopolist and the marginal revenue from it are also shown. Monopoly output, designated Qm, is the output corresponding to the point where the marginal revenue and marginal cost curves intersect. In order to induce buyers to purchase this quantity of goods, the monopolist sets a price equal to Pm.
At this price and value of output, the monopolist receives a profit per unit of commodity (Pm - ASm). The total output is equal to Qm. The total economic profit is, therefore, (Rm -ASm) Qm.
How much profit a monopolist actually earns depends on both costs and demand for his product. If fortune turns away from you, you may not find those willing to buy the rights to your concerts, even if you offer them at a discounted price. This is show business: you can be exalted today and expelled tomorrow. Having a monopoly does not guarantee that you will make a profit. Monopolists can, and do, exit an industry when demand for the product they are selling declines. Owning the only authentic Turkish bath in the city will be unprofitable if the price is less than the average cost for the volume of output at which MR = MC.
If the demand and marginal revenue from the product supplied by the monopolist decreases, then it may not be possible to make a profit. If the price corresponding to the output at which MR = MC falls below average costs, the monopoly will suffer a loss. This is shown in graph B (Fig. 1.1). In the United States of America, Amtrak has had a monopoly of passenger rail travel on many routes in recent years. However, even in spite of this, the firm suffered losses.
Rice. 1.1. Monopoly price and release
The monopoly firm maximizes profits by releasing the quantity of goods corresponding to the point where MR = MC. Then she sets the price Rm. which is required to induce buyers to purchase the quantity Qm. Possession of a monopoly, however, does not guarantee a profit. In option A, the monopolist makes an economic profit. In option B, the demand is insufficient to make a profit at the point where MR is MC. The firm incurs economic losses because P< АС.
1.5. Costs and efficiency of monopolies
How to evaluate the effectiveness of a monopoly market? We have seen that a monopoly, unlike a competitive firm, charges a price that is higher than marginal cost. From the point of view of consumers, monopoly is undesirable. On the other hand, the monopoly high price is very attractive for the owners of the company. How do the benefits of the owners of the firm compare with the costs that consumers are forced to bear? Perhaps monopoly is beneficial from the point of view of society as a whole?
We use total surplus as a measure of economic well-being. Recall that the total surplus is equal to the sum of the consumer surplus and the producer surplus. Consumer surplus is defined as the difference between the amount that consumers are willing to pay for the product and the amount actually paid. Producers' surplus is the proceeds received for the goods sold minus the costs of their production. In our case, we have a producer in the singular - a monopolist.
The balance of supply and demand in a competitive market is not only a natural, but also a desirable result of its functioning. The “invisible hand” of the market ensures the allocation of resources that maximizes the amount of total surplus. Since monopoly results in a different allocation of resources from the allocation of a competitive market, a monopoly market must, in some way, fail in maximizing economic welfare.
Irrecoverable loss
We begin our analysis by examining the behavior of the monopoly as if it were ruled by a generous planner who is interested not only in the profit of the owners of the firm, but also in the benefit of its consumers and seeks to maximize the total surplus equal to the sum of the producer's (profit) surplus and consumer surplus. Remember that the total surplus is equal to the value of the product for the consumer minus the cost of production of the product for the monopoly producer.
Rice. 1.2 demonstrates to us the definition of production by our “goodwill specialist”. The demand curve reflects the value of a product to consumers, that is, the amount they are willing to pay for the product. The marginal cost curve reflects the costs of the monopolist. Thus, socially effective output is at the intersection of the demand curve and the marginal cost curve. At volumes below this level, the value of the product to consumers exceeds the marginal cost of its production, therefore, an increase in output leads to an increase in the total surplus. Above this level, marginal costs exceed the value of the product for consumers, which means that with a decrease in output, the total surplus will increase.
Rice. 1.2. Effective production level
If the monopoly were truly ruled by a generous planner, it would achieve effective output by setting a price at the intersection of the demand and marginal cost curves. That is, a "goodwill specialist", like a competitive firm and unlike a profit-maximizing monopoly, would set a price equal to marginal cost. Since such a price would provide consumers with accurate information about the cost of producing a good, consumers would purchase an effective volume of the good.
We can estimate the welfare impact of a monopoly by comparing the output the monopolist chooses and the output that our planner would stop at. The monopolist decides to supply the volume of output that corresponds to the intersection of the marginal revenue curve and the marginal cost curve; the planner chooses the volume of output corresponding to the intersection of the demand curve with the marginal cost curve. Rice. 1.3 shows us the difference in approaches: the decision of the monopolist is less than the socially effective volume of output.
The inefficiency of a monopoly is also considered in terms of the monopolist's price. Since the market demand curve expresses the inverse relationship between the price and the volume of supply of a commodity, the volume of production below the socially effective output corresponds to a price that exceeds the socially effective price. When the monopolist sets a price that exceeds the marginal cost, some potential consumers who value the product above the marginal cost of production, but below the price of the monopolist, refuse to purchase it. This is the essence of inefficiency, because for such consumers the value of a given commodity is higher than the cost of acquiring it. Thus, monopoly pricing is, to a certain extent, an obstacle to the implementation of mutually beneficial trade.
Rice. 1.3. The ineffectiveness of a monopoly
The inefficiency of a monopoly can also be measured (Figure 1.3). Recall that the demand curve reflects the value of the product to consumers, and the marginal cost curve reflects the no-cost of the monopoly producer. Thus, the area of the return loss triangle between the demand curve and the marginal cost curve is equal to the decrease in total surplus due to monopoly pricing. The irrecoverable loss caused by a monopoly is like the irrecoverable loss due to taxation. Indeed, a monopolist is like a secret tax collector. The imposition of a product tax drives a wedge between consumers' willingness to pay for a product (demand curve) and producer costs (supply curve). Since the monopoly, exercising power over the market, sets a price above the marginal cost, it drives in the same "spacer". In both cases, the forcible introduction of the wedge causes sales to fall below the optimal for society. The difference between the "wedges" is that tax revenues are received by the government, and monopoly profits are received by the private firm.
Monopoly Profits: Costs to Society?
It is difficult to avoid the temptation to accuse the monopolies of "making a profit at the expense of society." Indeed, the monopoly firm earns higher profits from market power. The economic analysis of a monopoly shows, however, that its profit itself does not always represent a social problem.
Welfare in a monopoly market, as in any other, includes the welfare of producers and the welfare of consumers. Whenever a consumer overpays an extra dollar to the monopolist, the producer's wealth rises by the same amount. But this "leakage" of money from the consumers of the commodity to the monopoly does not change the total market surplus. In other words, monopoly profit does not in itself mean a reduction in the size of the economic pie; the supplier simply gets the bigger piece, and the consumer has to be content with the small one. If you do not consider (guided by some special considerations) consumers more worthy subjects of the market - and such a judgment lies outside the scope of the concept of economic efficiency - monopoly profit does not pose a problem for society.
The problem of a monopoly market is associated with the fact that the level of production is below the value that maximizes the total surplus. Irrecoverable loss is a measure of reducing the size of the economic "pie". A decrease in efficiency is an inevitable consequence of a monopoly high price: when the price is higher than the marginal cost, the volume of consumption of the goods decreases. However, the profit that the products sold do not create problems. The problem is ineffectively low production. ”Or, to look at the other side, if the high price of the monopoly did not discourage some consumers from buying a given good, it would simply increase the producer's surplus just as much as the consumer's surplus decreases; would remain the same as if the aforementioned fine-minded planner were in control of the monopoly.
There can be, however, one exception to this conclusion. Suppose the monopoly incurs additional costs to maintain its exclusive position. For example, a government-created monopoly incurs the cost of expanding the lobbyist ranks necessary to extend its monopoly rights. In this case, it can use part of its monopoly profit to cover additional costs. Then the social costs of monopoly include, along with the irrecoverable loss arising from price mismatch with marginal costs, and these unreasonable costs.
1.6. Natural monopoly
Occasionally, the effect of economies of scale can be so large that it can lead to the uniqueness of the producer of the good (see the dotted line in Figure 1.4).
Rice. 1.4. Economies of scale and structure of industries
In other words, in some industries, there is a rule without any restrictions: the larger the scale of production, the lower the costs. This creates the preconditions for the strengthening of one single manufacturer in such an industry.
Natural monopoly - a monopoly that arises from the fact that a single firm provides the market with some product or service at a lower cost than two or more firms would do.
When the average total cost curve of a firm is steadily declining, so-called natural monopoly occurs. In this case, if production is distributed among two or more firms, each firm produces less output and the average total cost increases. As a consequence, for any volume of output, the costs are minimal when the producer is a single firm. A prime example of natural monopoly is water supply settlements... To provide water to the residents of the city, the firm must build a water supply network covering all of its buildings. If two or more firms competed in the offer of this service, each of them would have to incur the fixed costs of building its own water supply. The average total cost of water supply is minimal when the entire market is served by a single firm. In some cases, one of the factors determining the emergence of a natural monopoly is the size of the market.
Such a state of the market is a monopoly - a situation fraught with a number of major problems for the economy. In this case, however, monopoly arises due to natural reasons: the technological features of production are such that a single producer serves the market more efficiently than several competing firms are able to do. Economists call this monopoly natural or technological. Various types of infrastructure are a classic example of this. Infrastructure is a supply chain that includes:
1) the networks through which the deliveries of products (people) are carried out between economic agents located at a distance from each other;
2) activities for the operation of these networks.
It is easy to understand that the effectiveness of a natural monopoly in infrastructure industries is ensured by the technological unity of the network at its disposal. Indeed, it is not economically feasible to build two alternative airports or lay two competing railways next to each other. It is absurd to install several taps in apartments, from which water supplied by different companies will flow!
From an economic point of view, this will mean a multiple increase in average fixed costs. So, in the conditions of the existence of a natural monopoly, the cost of the power supply network is distributed in the form of costs for all electricity sold. If there are two parallel networks, then their cost will accordingly double. The flow of energy passing through each will halve. And the fixed costs for each kilowatt of energy purchased by the consumer will double!
It makes no sense to split up natural monopolies either. For example, even if the railway network monopolized by one company is divided into several regional sections and transferred to the ownership of independent companies, the natural source of monopoly will still not be eliminated. It will still be possible to drive from city A to city B on the same road.
As a result, the single market for transportation services will be divided into a number of local ones. Instead of one monopoly, there will be several (each in its own area). The level of competition will not increase. Moreover, due to the difficulties in coordinating the work of regional companies, the total costs of the railway industry may increase.
The macroeconomic aspect of the problem is also important. Infrastructure networks, which are natural monopolies, ensure the interconnection of economic agents and the integrity of the national economic system... It is not for nothing that they say that in modern Russia the economic unity of the country is not least determined by unified railways, general electricity and gas supply.
Summary: both microeconomic analysis and macroeconomic considerations show that the destruction of natural monopolies is unacceptable. Does this mean that the state should refrain from interfering in the activities of natural monopolies? Not at all!
The impact of natural monopolies on the reformed
Russian economy
Russia did not escape negative impact branches-natural monopolies in the market. There are four thousand monopolist enterprises in the Russian industry, and their products account for 7% of the total. Of these, 500 are natural monopolies.
With a general reduction in production in Russia, the demand for products and services of natural monopoly industries, with the exception of communications, has been steadily declining. These industries are extremely capital intensive and a significant portion of their costs are permanent. As a result, the share of fixed costs in the unit price increased. In addition, until recently, the subjects of natural monopolies financed investments largely from internal sources (investment and stabilization funds formed at the expense of cost and profit), which determined an excessive burden on tariffs.
Cross-subsidization of some consumer groups at the expense of others persisted in virtually all industries. Low tariffs for the population and budgetary organizations subsidized by industrial and commercial consumers. For example, in rail transport, losses on passenger traffic are covered by freight rates.
1996 - 2000 sectoral prices of Russian natural monopolies grew at a faster pace than in other sectors of the economy. They have approached the world level, and in some cases (for example, international telephone tariffs) have surpassed them. Consumers began to put pressure on the government, even to the point of demanding a price freeze.
The rapid and significant rise in prices in the electric power industry, gas industry, communications industries and railway transport necessitated raising the question of the justification of costs (wages, social payments, investment activities) and the compliance of the quality of the products and services offered with the price level. In all industries containing natural monopoly segments, wages exceeded the average for the economy and their workers enjoyed large social benefits compared to other industries.
Given the fundamental nature of these industries, it is obvious that the rise in prices for their products was a powerful factor in macroeconomic inflation, which economists rightly describe as cost inflation.
However, it cannot be stated unequivocally that the natural monopoly industries during the years of transition to the market ensured their prosperity at the expense of the rest of the economy. The consequence of price discrimination - catastrophic non-payments - hit its own source most painfully.
According to the industry structures included in the system of the Ministry of Fuel and Energy, debtors' debt on settlements and payments to electric power enterprises amounted to 12.9 trillion by August 1, 1998. rub. and continued to increase further by an average of 36 billion rubles. per day, half of the released energy was not paid on time. The Ministry of Economy presented to the Government of the Russian Federation a draft decision providing for the implementation of the previously concluded agreement between the basic industries, energy and transport on joint actions to stabilize prices and tariffs and improve settlements between enterprises. The project was not accepted.
RAO "UES of Russia" then believed that it was necessary to bring the maximum number of generating sources to the federal wholesale electricity and capacity market in the expectation that electricity producers would be involved in competition, which would lead to the search for ways to reduce production costs and reduce the cost of energy (lowering tariffs ).
These calculations of the “romantics of the market” from RAO “UES of Russia” are not destined to come true for the simple reason that regional AO-energos are monopolists, at least in relation to consumers in their region and, therefore, do not feel the need for competition. Equally important is the fact that a competitive market can only arise if there is spare capacity. Their level in Russia is 3% (versus ~ 30% in the USA and Germany) and it is not enough even to compensate for seasonal and daily peaks in consumption. The latter are covered by interregional flows, which protects the European part of Russia from mass blackouts of consumers due to a critical drop in frequency in the power system.
By November 2000, consumer defaults reached $ 27 trillion. rubles, and already 86% of the supplied electricity was not paid on time. It is clear that the most important role in this mechanism for pumping accounts receivable belonged to the tariff policy of the industry. In addition, the high price of electricity affects the cost of industrial products, which also affects the power engineers themselves. By the end of 2000, 70% of payments for electricity supplied were in the form of barter transactions. Now the goods of debtors, received as payment for electricity, are themselves subject to sale through a network of resellers.
By August 1, 2001 overdue receivables consumers of electricity amounted to 63.2 trillion. rubles, gas - 8.7 trillion. rubles, railways and oil pipeline transport - 65.3 trillion. rub. [Goskomstat RF], which in total exceeds 56% of all non-payments in the Russian economy.
Due to the stricter regulatory influence of the government on the prices of natural monopolies in the first half of 2001, their growth was significantly limited. The results were not long in coming: since the beginning of the summer, a sharp decline in inflation has been achieved.
However, the strict containment of tariff growth, according to industry experts, led to a sharp deterioration in the financial condition of the natural monopoly industries. At the same time, in conditions of closed financial information and without an independent audit of the relevant enterprises, it is difficult to support or refute such conclusions. One way or another, in a number of cases the natural monopolies themselves need to be protected from unreasonable pressure from certain political forces, which leads to the undermining of the financial stability of these industries vital for the state.
II. ANALYTICAL PART
2.1. International monopolies
A special kind of monopolies are international monopolies. The economic basis for the emergence and development of international monopolies is a high degree of socialization of capitalist production and the internationalization of economic life. There are two types of international monopolies. The first is transnational monopolies. They are national in capital and control, but international in scope. For example: American oil concern "Standard Oil of New Jersey", which has enterprises in more than 40 countries, assets abroad make up 56% of their total, sales volume 68%, profit 52%. The overwhelming majority of production facilities and sales organizations of the Swiss food concern Nestlé are located in other countries. Only 2-3% of the total turnover comes from Switzerland. The second type is actually international monopolies. The peculiarity of international trusts and concerns is the international dispersal of share capital and the multinational composition of the core of the trust or concern. For example: the Anglo-Dutch chemical and food concern "Unilever", the German-Belgian trust of photochemical products "Agfa-Gevert". Their number is not very large, since the pooling of capital of different nationalities is fraught with great difficulties: differences in the legislation of countries, double taxation, opposition of any government, etc. The main forms of association: the establishment by the monopolies of different countries of a joint company in the form of an independently existing trust or concern; acquisition by one monopoly of a controlling stake in a foreign monopoly; direct merger of assets of firms from different countries (de jure merger); consolidation of companies of different nationalities through "quasi-mergers". The latter is carried out through the exchange of shares between firms retaining legal independence, either through the mutual appointment of administrators, or through collective ownership of shares in joint companies. This type of merger is the most common form of formation of international trusts and concerns. They help different national firms that combine operational activities not only to avoid double taxation, but also to maintain formal independence, corporate structure, individual characteristics of production and sales, their own trademarks, the previous location of the headquarters of the parent companies and belonging to the national legislation of their country. ...
2.2. State control over monopolistic activities in advanced economies
The implementation of the provisions of antimonopoly legislation abroad is carried out in an administrative, judicial or mixed manner. In the latter case, the decisions of the administrative authorities can be appealed to the courts.
The most difficult situation with state control over monopolistic activities has developed in Great Britain. The peculiarities of the development of antimonopoly legislation in Great Britain led to the creation of two systems of control over monopolies. In the first, based on fair trade and competition laws, the Fair Trade Office, the Monopoly Commission, and the Secretary of State for Trade and Industry play a key role. The second control system, provided by the legislation on restrictive trade practices, assigns a key role to the Restrictive Practices Court. The Fair Trade Office keeps various information about abuse of dominance, informs the government of its decisions and, if necessary, initiates the following proceedings: Cartel contracts to the court for restrictive practice, initiates proceedings for the establishment and maintenance of resale prices. It should also be noted that the activities of the Office in determining competition policy are of an advisory nature.
The main task of the Commission on Monopolies and Mergers is to investigate and report on the existence (or possibility of occurrence) of a monopoly situation or the implementation of a merger of enterprises. In the event that the Commission on Monopolies comes to a conclusion on the violation of public interests, the Secretary of State has broad powers to apply various measures of influence on the offender: to issue orders to terminate the contract, to prohibit the supply of goods, linking transactions, discrimination, to prohibit or restrict mergers, on the division of enterprises through the sale of any of their parts or in some other way).
The role of the British Secretary of State for Trade and Industry in regulating monopolies and competition is significant. Since the conclusions in the reports of the Commission on Monopolies are advisory in nature, the final decision on issues of monopoly situations or anti-competitive practices is carried out by the Secretary of State or other ministers. In addition, the Secretary of State is empowered to grant exemptions from restrictive trade practices legislation on the basis of the economic insignificance of the relevant cartel contracts.
In the United States, the main work of government control over monopolistic activities is carried out by the Department of Justice's Antitrust Division, which is empowered to bring legal proceedings against individuals who violate antitrust laws. In addition to the Ministry of Justice, the Federal Trade Commission exercises state control over compliance with antitrust laws. At the same time, it should be noted that the main burden in carrying out these events falls on the federal courts and, first of all, on the US Supreme Court, which assesses the legality or invalidity of certain restrictive conditions in contracts or methods of economic activity.
In Germany, the so-called cartel authorities are involved in state regulation of market relations, which leads to mitigation of the negative consequences of excessive monopolization. These bodies include the Federal Office for Cartels, the Federal Minister for Economic Affairs and the state authorities. They are joined by the Commission on Monopolies, created to provide opinions on the concentration of enterprises in the FRG. The activity of industrial and professional associations in drawing up competition rules for their industries can be recognized as self-regulation of competitive relations by private business. Cartel authorities may conduct administrative proceedings, administrative fines or investigations against businesses, cartels, industrial or professional associations. In the course of administrative proceedings, in particular, the issues of permitting or prohibiting cartel agreements, invalidating merger agreements, and prohibiting illegal behavior of enterprises dominating the market are resolved.
In France, control over monopolistic activities is entrusted to the Competition Council, the Ministry of Economy and the courts of general jurisdiction. The Competition Council is considered to be an independent administrative body whose decisions cannot be “vetoed” by the Minister of Economy. He performs advisory functions commissioned by various institutions and organizations, and in certain cases he himself imposes the appropriate sanctions. An important part of the control of monopolistic practices in France is the check of economic concentration in the market. On the initiative of the Minister of Economy, the Competition Council may review any concentration project or any concentration of enterprises that could harm competition, in particular the creation or strengthening of a dominant market position.
2.3. Natural monopolies in the Russian market and their reform
1. Electric power industry. The formation of RAO "UES of Russia" in the form of a joint-stock company dates back to November 1992, when the capacities of over 700 power plants (HPP, GRES, CHPP) and the Unified Energy System were combined. The main goal of RAO's formation was to form a wholesale electricity market. When RAO was created, about 50 state-of-the-art power plants - more than half of the total capacity were removed from the territorial AO-energos and transferred to the federal ownership of RAO "UES of Russia". The state owns 52.6% of the shares in the capital structure of RAO "UES of Russia", while foreign investors account for 30.7%. RAO "UES of Russia" controls 77.7% of the total capacity of the country's power plants. The company consists of 72 regional AO-energos. In the capital of 53 of them, RAO holds 50 and more percent of shares, in the rest - less than 50%. The company's fixed assets are estimated at $ 400 billion, the holding's market capitalization is about $ 13 billion. Owning most of the energy facilities, RAO "UES of Russia" owns the entire power transmission network of the country. Nuclear power plants account for a significant share of the plants not included in RAO, accounting for 13% of the total electricity production in the Russian Federation.
Most of the problems of this most "advanced" from the point of view of what is commonly called liberal reforms, natural monopoly are generated by two reasons: first, the ill-conceived concept of the so-called Federal Wholesale Electricity and Power Market (FOREM), designed to introduce elements of competition between producers and between electricity consumers; secondly, the fragmentation of the unified energy system in the process of corporatization of regional AO-energos, the transformation of the latter into local monopolists, who ultimately found themselves completely subordinate to local authorities.
For the sake of fairness, it should be noted that the impetus for regionalization, the fragmentation of the single electricity market was the introduction in 1991 of differentiated tariffs for paying for electricity by consumers of certain regions, depending on the real costs of each energy system. This decision led to irrational loading of energy capacities: large highly efficient plants remain chronically underutilized while less efficient small plants belonging to regional power systems are more fully loaded.
Tensions also persist in the relationship between RAO "UES of Russia" and independent power plants trying to enter the wholesale market with their often cheaper electricity. In conditions of "competition" the owner of the networks - RAO "UES of Russia" - is interested not only in selling, first of all, "its own", often more expensive, electricity, but also in making a profit from the resale of "someone else's" electricity purchased at a low price. Producers of cheap energy are deprived of the opportunity to sell it directly to solvent consumers, bypassing regional and federal intermediaries.
The main problem of the Russian power industry is non-payment. Due to the specifics of the products manufactured, the application of sanctions against non-payers is extremely difficult. The situation caused by non-payments can be significantly improved by realizing the significant export potential of RAO. Currently, about 1/3 of the installed capacity of power plants (200 billion kWh) turned out to be excessive due to a sharp decline in production. According to some estimates, the export of electricity generated at excess capacity would generate up to $ 16 billion annually. However, the transmission of large volumes of electricity over long distances while maintaining its parameters requires the modernization of power lines and auxiliary facilities. So far, only about 10 billion kWh of electricity has been exported to non-CIS countries.
In our opinion, it is necessary to make fuller use of the advantages of a single centralized energy system as a more stable form of organizing the energy economy. The organization of the production of electrical energy, in which the generating capacities, transmission and distribution networks are concentrated in the same hands, provides more opportunities for expansion to foreign markets. It is no coincidence that such a scheme is successfully operating in France, one of the world's largest exporters of electricity.
The main goal of reforming the energy system - cost reduction - is fundamentally unattainable without a well-thought-out investment policy aimed at technical re-equipment of the industry. The half measures proposed by RAO "UES of Russia" (organizing separate accounting for power systems, streamlining payment of bills by the population, eliminating intermediaries, transferring social and cultural facilities to the balance of local authorities, reorganizing the work of power sales organizations) are useful in themselves, but not sufficient.
2. Gas industry. RAO Gazprom was established in February 1993 through the transformation of the State Gas Concern, in 1999 it was transformed into OAO Gazprom in accordance with the requirements of the legislation on joint stock companies. It accounts for about 25% of all federal budget receipts. Gazprom is the largest creditor to the Russian economy. According to the reports of "Gazprom", its monthly foreign exchange earnings are 600 million dollars, 800 million rubles. receives from internal consumers "Mezhregiongaz". OJSC Gazprom owns about 30% of the European gas market (21% of supplies to Western and 56% to Eastern Europe). It has huge assets abroad, mainly in the form of stakes in companies that own gas transmission and gas distribution systems. Gazprom includes 8 gas production associations and 13 regional gas transmission enterprises, as well as the foreign economic enterprise Gazexport; they carry out about 95% of gas production and 100% of gas transportation.
Among the factors determining the stability of Gazprom's positions in the world market are the uniqueness of the resource base and the presence of a developed gas pipeline system. In creating a unified gas supply system, Russia has overtaken the countries of Western Europe, where such a system is just beginning to take shape. For example, in Germany, Gazprom has a powerful gas pipeline system that allows it to go directly to the consumer and thereby significantly increase revenue from gas sales. Gazprom has created a number of alliances with major Western corporations, which have made it possible to combine the technological, financial, scientific and technical potential of the companies. Thus, the merger with the Wintershall group (a subsidiary of the BASF concern) gives Gazprom the opportunity to control up to 10% of the German market with the prospect of increasing this share.
The economic and financial successes of Gazprom are largely due, first, to the beginning of the reform of the gas industry in 1989, which gave the concern two additional years to adapt to the new business environment. Second, by the beginning of the reforms, Gazprom had experience in working on foreign markets. He managed to successfully implement his own, "Gazprom" model economic reforms... Both large and less significant enterprises that are part of the Gazprom system, in fact, remain its production divisions. As legal entities, they do not own either their assets, including subsoil use rights, or their income. Their statutory status is "an OJSC enterprise". From a legal point of view, these are unitary enterprises established by an OJSC and based on the right of operational management.
Rigid vertical organizational structure Gazprom allows it to develop and implement a promising development program. Along with active external expansion, it provides for large investments in the domestic manufacturing industry, according to some estimates, amounting to hundreds of millions of dollars. The strategy of competition in foreign markets requires independence from the supply of imported equipment.
The development model chosen by Gazprom determines the nature and directions of the corporation's interaction with the state. Only as a large company - a natural monopoly - Gazprom is capable of becoming a powerful "locomotive" of the Russian economy in the foreseeable future. Demonopolizing Gazprom would mean creating favorable conditions for external competitors with the most negative consequences not only for it, but for the country as a whole.
The inexpediency of restructuring Gazprom, in particular, spinning off Gazexport from it, is confirmed by domestic experience. So, in the Soviet period, when production, transportation and export operations were organizationally separated. The Soviet Union acted as a "supplier to the border". As soon as Gazprom became a vertically integrated structure, its position in the fight against foreign competitors was sharply strengthened.
3. Railway transport. The share of railways in the total freight turnover of all types of public transport in the country is about 80%. The share of rail transport in passenger traffic reaches 41%, which is comparable in volume to road transport. The most important feature of the industry is that its main product - transportation - is created, as a rule, by several enterprises - railways, that is, at the level of the entire industry. Hence the need for a centralized formation and distribution of income from transportation, the accumulation of financial resources for the development of the railway network, the acquisition and repair of railway stock, the implementation of the achievements of scientific and technological progress.
Comparison of the performance indicators of Russian railways, estimated by the number of ton-kilometers per person employed in transportation, with foreign data indicates that in Russia it is 2.5-3 times higher than in England, France, Germany and China. ... At the same time, the turnaround time of wagons in our country is 2-3 times less than in the United States, despite the long transportation distances. V Western Europe railways are unprofitable: losses reach 50% and are compensated by state subsidies. In Russia, railways generally operate at a profit (despite the fact that the average railway tariff in Russia is 8-10 times lower than in Western countries). Losses of passenger transport are covered by the work of freight.
There are three concepts for reforming the Ministry of Railways. In descending order of their radicality, these are: the concept proposed by the European Bank for Reconstruction and Development; the concept of the Ministry of Transport of the Russian Federation; a concept developed by the Ministry of Railways itself, the so-called "government". The essence of the latter is that the transportation sector is distinguished from the railway transport as a whole. It is defined as competitive and open to anyone who wants to start a business here. It is planned to develop competition in this sector by purchasing their own rolling stock by industrial enterprises - users of the railway network services, creating freight and passenger companies. All this should lead to a competitive reduction in transport costs. The implementation of this concept includes three stages. The first stage - until 2000 - provides for the creation of unitary freight and passenger companies in the Ministry of Railways. At the same stage, a part of factories, construction enterprises, agriculture, housing and communal services should be withdrawn from the Ministry of Railways system. The second stage - until 2005 - is the adjustment of the work of passenger and freight companies. The third stage - after 2005 - corporatization of passenger and freight companies, redistribution of state and economic functions of the Ministry of Railways, creation of a central railway company. However, the effectiveness of the proposed reform will be low, if only because the share of the cost of the car fleet in the cost of transportation is no more than 18-20%. Moreover, the quality of services of new operators will depend little on their efforts, since over 80% of costs are associated with the work of centralized services: track maintenance, electrification, traction, etc. In addition, the proposed concept is contrary to existing legislation. The law "On Federal Railway Transport" says: "Railway transport is a single production and technological complex." The concept is ultimately aimed at crushing it. Where urgent reforms are really needed is in freight forwarding, which is an extremely lucrative form of customer service around the world. More than two thousand forwarding companies operate on the transport services market. Their activities are characterized by a one-way orientation - they only sell and resell freight, that is, railway tariffs for transportation. This devalues the very concept of "freight forwarding", the purpose of which, as you know, is to attract additional traffic volumes, provide additional transport services and accelerate the delivery of goods, freeing shippers and consignees from a large number of operations. Today, the receipt of freight forwarding services is actually replaced by the use of the right to a discount provided by the Ministry of Railways to one or another forwarder or consignor. As a result, the volume of discounts is growing, while the volume of traffic is falling.
2.4. Tariff regulation of natural monopolies and the impact on efficiency
Earlier, the work considered such issues as the concept of monopoly and natural monopoly (since this type of monopoly is mainly widespread in Russia), the influence of monopolies on the efficiency of the economy, now I would like to highlight in the statistical part such a problem as the regulation of monopolies and their presence in the Russian economy. Monopolies are fraught with losses for society. Therefore, the state assumes the function of regulating monopolies, especially natural ones.
Even the most perfect price regulation will not lead to success without restoring state influence in the natural monopoly entities belonging to it (RAO UES of Russia, Ministry of Railways and RAO Gazprom). It is not a matter when a trust agreement for managing the state's stake in Gazprom is characterized by the president as nothing less than a "robbery of the country", and since the formation of RAO "UES of Russia" not a single discussion of this problem has "overgrown" with hundreds of intermediary firms directing financial flows bypassing not only the budget, but also the company itself.
In accordance with the presidential decree of February 28, 1995 No. 221 "On measures to streamline state regulation of prices (tariffs)" to restore order, collegia of state representatives in natural monopolies were created, which should promote the growth of the market value of shares of these companies, control the timeliness of submission to the state budget all due payments, monitor compliance with antitrust laws and create elements of a competitive environment. The presidential decree is conceptual in nature and does not contain a specific plan for reorganization, although the separation within natural monopolists structural units spelled out clearly enough.
Natural monopolists in the communal sphere have not been forgotten either. Thus, putting things in order in local natural monopolies (utilities) involves the introduction of energy-saving technologies, starting with the installation of meters and water meters in the apartments of Russian citizens, which, according to B. Nemtsov, can give up to 30% cost savings.
More questions arise with the price regulation of natural monopolies. The price space in Russia currently includes two areas. The first is the sphere of free market prices, which are set by the economic entities themselves based on the balance of supply and demand. Moreover, the prices for the products of enterprises that occupy a dominant position in the market, but do not belong to natural monopolies, are also formed freely and are included in this area, although they are controlled by the antimonopoly authorities of Russia. The second is the sphere of direct state regulation of prices and tariffs for the products of natural monopolies and the so-called socially significant goods.
Periodically audits of the practice of setting tariffs from year to year by the State Attestation Commission of the Russian Federation show the same thing: systematic violations of the procedure for setting tariffs, indicating the imperfection of the regulatory documents on pricing themselves. These documents make it possible to increase the number of industrial and production personnel while reducing production volumes, and provide numerous benefits.
They are developed only in the interests of producers and do not take into account the economic interests and opportunities of consumers. Such tariffs provide: receiving unreasonably high wages in comparison with other industries and regions; payment of dividends regardless of how the enterprise has worked; insurance of his employees; inappropriate use of part of the funds intended for the construction of housing and social facilities.
For example, in railway transport, the following are widely practiced: levying additional payments for unfulfilled (underperformed) work (services) to escort wagons and cargoes by paramilitary guards from Russia; overestimation of tariffs in suburban passenger traffic; imposing on counterparties when concluding contracts for the carriage of goods conditions that are not related to the subject of the contract; the allocation of food and industrial goods to the railway, various materials; the requirement to pay in excess of tariffs for the shipment of export cargo, etc.
Numerous violations of the current pricing procedure and the imperfection of the latter were shown by inspections in other branches of natural monopolies.
The point is that the mechanism itself for regulating prices for products and tariffs for services of natural monopolies should be as open, understandable and "transparent" as possible, that is, each buyer has the right to know what and how much he pays for. In doing so, he must be sure that the price or tariff charged is reasonable and fair. All of the above applies equally to freight and passenger tariffs for railway services, electricity transmission and gas transportation.
The Law "On Natural Monopolies" stipulates that state bodies, among the methods of regulating the activities of subjects of natural monopolies, may apply price regulation by determining prices (tariffs) or their maximum level. Recall that in accordance with the government decree, in addition to using the marginal coefficients of price change, which we propose to apply taking into account inflation indices, price regulation can be carried out in other ways, for example, by setting fixed prices, marginal prices, markups, marginal level of profitability, declaring price increases.
The use of fixed prices, price caps or markups for effective price regulation in an inflationary transition economy is obviously inappropriate due to the fact that their values will have to be constantly revised. It is desirable that the regulation of prices over a significant period of time, at least during the year, occurs automatically.
V recent times, in particular, in the Concept of Pricing Policy of the Russian Federation for 1996-1997, developed by the Ministry of Economy of the Russian Federation, as a method of regulation, it was proposed "to take into account when setting prices a reasonable rate of return on capital used, ensuring dividends on equity capital." However, a professional revaluation of fixed assets takes a lot of time, that is, the procedure for approval and revision of regulated prices and tariffs will take years. This is evidenced by the experience of regulation in the United States. In addition, in world practice, the question of at what cost - initial or replacement - the capital investment should be assessed has not yet been resolved.
Another major problem is also complicated - the establishment of a "reasonable" or "fair" rate of return, because our specialists in price regulation, due to the underdevelopment of official statistics, have no idea even about the value of the average rate of return in Russia. Finally, the regulation of prices and tariffs for the products of natural monopoly entities by establishing a fixed rate of return on the invested capital of the corporation will serve as a stimulus for finding illegal ways to obtain "fair" profit, as was the case when the rate of return was applied in 1996-2000. Only then did the monopolist wind up current costs, and now investments will also be maximized.
Thus, of the methods of price regulation proposed by the government decree, the method of price change coefficients remains, which was actively used (unsuccessfully) over the years of reforms and, most likely, will be applied in the future. On the one hand, this is natural. On the other hand, it is urgently necessary to eliminate the accumulated shortcomings and errors on the basis of domestic and foreign experience of regulation. Unfortunately, the Russian economy will still be characterized by inflation for quite a long time, despite the successes in the field of financial stabilization, if we approach the matter by Western standards. And in developed countries an economy with annual price increases in excess of 3-5% per year is considered inflationary. Therefore, we all the more need special instruments of the state's pricing policy in relation to natural monopolies. Obviously, in the conditions of the transitional inflationary economy of Russia, the regulation of prices for their products should be carried out by means of indexing, for example, using the consumer price index (or the index of wholesale prices of industry). Such recommendations are based on modern foreign experience.
In particular, in the UK, starting in 1985, the regulator initially sets a so-called "fair" price based on reasonable costs of the enterprise and normal profit. He is then allowed to increase his prices by the formula CPI - X. The first component here is the consumer price index, the second is the planned cost savings. All values are taken as a percentage. If, for example, the estimated cost savings are planned at the level of 2% per year, and the annual inflation is expected to be U / o, then a natural monopoly enterprise can increase its prices by only 3% on an annualized basis. When an enterprise objectively needs investments, the planned value of cost savings can be negative.
Table 2.1
UK Telephone Price Regulation
Based on this experience, it is quite appropriate to talk about the need to adjust the price level for the products of natural monopolies in accordance with the general inflation rate (consumer price index). However, if the main share of the costs of the monopolist enterprise is made up of prices for raw materials, it is possible to use the indicators of price increases in the raw materials industry. Of course, there are also more complex dependencies.
So, if the regulator, after appropriate monitoring of the prices for the products of a natural monopolist, came to the conclusion that its prices should be closely correlated with inflation in the country (region) or the rise in prices in any raw material industry or (as in the case of RAO Gazprom ) industry as a whole, then current prices can be adjusted using the formula:
where: Рi - base price in the previous (i-th) period (month, quarter, year). The sought price can be determined not on the basis of the calculated base price, but on the actual price of the product, which has already "taken root" in the market, that is, recognized by the seller and the buyer; Jp is the projected (regional or federal) price index for the industry selected by the regulatory agency or for the industry as a whole; k - the correlation coefficient of the consumer price index and the selected price index for the products of the natural monopolist, calculated by the regulatory authorities based on the results of price monitoring. In theory, it should take into account the possible planned amount of cost savings or another criterion for increasing efficiency, or, on the contrary, the need for urgent investments (in fact k = 1-X).
The calculation can also be made by adjusting for specific production conditions, that is, multiplying the base price by the cost index for individual (or all) cost items that occupy the largest share in its structure:
where: Р R - regulated price; Р F - base calculated or actual ("stuck") price; Js i, is the growth rate of costs for t-th article calculation of the cost of the tested products, in%; Ys i - the share of the i-th item of the calculation in the prime cost of the inspected product, in%. If the calculation takes into account the costs for all items of the calculation, then SYs i = 100%.
Practically this, or rather, a similar idea was attempted from May 1994 to September 1995 by the Ministry of Economy of the Russian Federation, jointly with the Ministry of Railways of the Russian Federation, the transport of the Russian Federation ". The nomenclature of material and technical resources consumed by railway transport was agreed and approved, with price changes of which the indexation of tariffs for the transportation of goods and for loading and unloading operations is carried out. It included eleven items: diesel fuel; diesel lubricating oil; fuel oil; coal; electricity; lumber; railroad rails; railway sleepers; crushed stone; reinforced concrete structures; thin sheet steel of ordinary grades (up to 4 mm).
However, the price index based on this nomenclature was not compiled taking into account the specific weights of the types of products included in it, but in such a way as to ensure the desired growth rate of railway tariffs for MGTS (the profitability of transportation reached 26%). Although such a distortion cannot discredit the method itself.
An attempt was made to eliminate the "monopoly overlap" with the level of railway tariffs by "freezing" them in October-December 1995. Another extreme arose - in December the industry incurred losses in the amount of 134 billion rubles. The first six months of 1996, the indexation of railway tariffs was carried out in an amount not exceeding the increase in wholesale prices of industry, that is, in fact, according to formula (1) with a coefficient k = 0.8 (or X = 20%). Losses from transportation amounted to 1.838 trillion. rub. It could not be otherwise. Even if we assume that the tariff, which "lost weight" in the conditions of the inflationary "freeze" by the beginning of 1996, became "reasonable and fair", and this is still a big question, then where did the 20% increase in the efficiency of railroad transportation, laid down in algorithm for changing the tariff?
From the second half of 1996 to June 1997, the revision of tariffs was carried out in parallel with the change in the wholesale price index of the industry (the scheme was tested and proven in Gazprom). And if in 1996 railway transportation by inertia was still unprofitable (156 billion rubles), then in 1997 they have already become profitable. And from July 1, 1997, a decision was made to reduce tariffs for rail transportation, as well as to lower prices for gas and electricity for industrial consumers. Is this a calculated tariff policy or a political environment?
The conclusion from the analysis is obvious: in the transitional economy of Russia, the indexing method is the most acceptable for regulating prices and tariffs for the products of natural monopolies, and the formula for tariffs for the products of natural monopolies should look like this:
Of course, the "X" value is not a criterion for increasing efficiency, but only an indicator of urgent investments (in the conditions of the permanent Russian budget crisis, one cannot seriously count on state support). By the way, the problem of the investment component of the tariff will be solved at the same time.
True, this also raises a number of questions. First, it is necessary to determine as accurately as possible the base price that is to be indexed and, after the appropriate period, revised. The base, or "fair" price, after carrying out these calculations, can be specified and in the end be the result of negotiations, agreement, or, more simply, bargaining between the seller and the buyer. However, if this calculated and agreed "reasonable" tariff is lower than the tariff established by that time in practice, then it is unrealistic to raise the question of its reduction. However, the answer to this question has already been found by economic practice. In this case, tariffs should be "frozen".
In addition to the above, in some cases and industries, you can use alternative methods of price regulation. British experts recommend using the cost comparison method. The regulatory body, in the presence of markets that are similar in general terms in terms of territory, the equipment provided by manufacturers and the needs of consumers, has the right to order an economic entity that is a natural monopolist to change the level and structure of its prices (tariffs) in accordance with a similar enterprise in this industry, but conducting a reasonable tariff policy. This method of regulation can be widely used in our country.
The approach to this problem used in Poland is of interest. According to him, if it is not possible to remove obstacles to competition in the market quickly enough, then it is necessary to apply measures of state regulation. For example, when tariffs for telephone services rose sharply, the Antimonopoly Office prohibited further increases, up to and including changing the total cost structure in accordance with European standards. This experience is very useful for Russian energy commissions regulating electricity tariffs.
American experts recommend that regulators control not the costs and revenues of the monopolist themselves, but the satisfaction of needs in the regulated market. The essence this approach boils down to the following: if a deficit develops and queues arise, if the buyer wishes but cannot purchase goods at a regulated price, then the latter must be increased. Scarcity is considered a greater evil than high prices.
2.5. Prospects for the restructuring of natural monopolies and the impact on the efficiency of the economy
Restructuring of natural monopolies is very promising for Russia. Price arbitrariness of natural monopolists here leads to increased regionalization of the national and localization of local markets. This is exacerbated by the underdeveloped market infrastructure and the absence or weakness of information systems. But the main thing is that state regulation of the activities of natural monopolies is, in principle, imperfect and ineffective.
It should be noted that regulators in almost all countries lack time, qualified personnel, and information. In most cases, audits of financial statements and accounting documents subjects of natural monopolies are random, superficial and stretched over time. The control bodies build their conclusions mainly on the basis of data provided by the inspected enterprises themselves. The effectiveness of such regulation is low and often, by restricting competition, does more harm than good.
Due to bureaucratic red tape, a fairly long period of time passes between the time of making a regulatory decision and the moment of its implementation, which becomes a brake on the development of these industries. Thus, in Russia, the deadlines for the implementation of resolutions of the government of the Russian Federation on the regulation of prices for the products of natural monopolies were almost always impracticable. And the process of regulation itself generates additional costs on the part of both the enterprises falling under it and the state.
Consequently, from the point of view of a long-term strategy, more effective measures are needed to compel monopolists to civilizational behavior than administrative regulation of prices and tariffs. An alternative way of influencing natural monopolists is deregulation and stimulation of competition.
It should be noted that the presidential decree envisages not only short- and medium-term measures to carry out the structural reform of natural monopolies, but also long-term ones, in particular, the restructuring of RAO "UES of Russia". It is planned to significantly expand the federal wholesale electricity and capacity market (FOREM) by increasing the number of electricity generating enterprises from 30 to 51, which should launch competitive mechanisms and help reduce energy tariffs. However, all this is not new. Much less studied is the question of what should (and should be?) Done to restructure the Ministry of Railways and RAO Gazprom.
It is known from foreign experience that the subject of a natural monopoly may face competition from enterprises that use a fundamentally different technique or technology in the production of the same or similar products. For example, modern innovations have opened up the possibility for many enterprises to independently build large enough power generators. Naturally, in this case, it becomes impractical to regulate tariffs for electricity and its transmission.
An identical situation may arise during the transportation of oil and gas, railroad transportation. Therefore, when deciding on the abolition of tariff regulation, it is very important that both suppliers and their customers have real access to alternative and competitive sources of supply or demand. In our opinion, Russian natural monopoly entities should be given the right to apply to the Russian government with proposals to abolish the regulation of prices and tariffs for their products in all cases of serious competition.
Government-encouraged competition within rail transport enterprises, ownership or management of railways and trains should be powerful constraints on rail tariff growth. The main objective obstacle to competition in railway transport is the contradiction between the owner of railway facilities, who would like to collect the maximum payment for using the tracks, and the user of these facilities, who is interested in minimizing their costs. It is characteristic for Russia at the moment that the owner of both railways and wagons is the state, represented by MP S.
The distinction between the ownership and operation of railways and trains can be experimentally carried out on one of the country's railways. The separation of enterprises-users of railway cars from the owner of the tracks, which will be the state for a long time to come, it is advisable to start with the division of accounts with subsequent organizational separation. In case of obvious success of this project, it can be completed by privatizing at least the enterprises operating the rolling stock.
The administrative and legal forms of such a division of economic entities at various stages are the subject of legal research and development. The task of economists is to solve the problem in such a way that the owner of the track does not set too high a fee "for access" to the infrastructure, and the enterprises operating the railway cars really enter into a competition for the consumer of transportation services.
The separation from the general "bundle" of capacities of those enterprises that provide products and services to end users is currently taking place in other branches of natural monopolies. For example, in the USA and Europe - in oil and gas pipeline transport, telecommunications and electricity. The Russian government, in our opinion, should also not lag behind events, but play ahead of the curve by trying to introduce the latest Western developments into domestic economic practice. However, in all these cases, carefully thought out measures to control prices are required, which the owner can freely set. It is important that the separation of infrastructure (its products and services) from the very provision of such services does not lead to new manifestations of monopoly and inefficiency.
As for the restructuring of RAO Gazprom, it is necessary to measure it seven times and, perhaps, not to cut it at all. First, the monopolized gas industry is introducing new capacities at a cost exceeding annual government investment. Secondly, Gazprom (the only Russian natural monopoly) is a subject not of the national, but of the world market, where the fiercest competition reigns, and its demonopolization is a gift to foreign capital. Finally, thirdly, according to Russian antimonopoly legislation, in exceptional cases, the actions of an economic entity can be recognized as legitimate if it proves that the positive effect from them, including in the socio-economic sphere, exceeds the negative consequences for the product market in question.
2.6. The presence of natural monopolies in the Russian market. Their share, impact on the national economy
2.6.1. Regulation of the activity of natural monopolies
The high economic efficiency of natural monopolies makes their crushing absolutely unacceptable. This, however, does not mean that the state can refrain from regulating natural monopolies. After all, their uncontrolled activities can cause significant harm.
As monopolists, these structures are trying to solve their problems primarily by raising tariffs and prices. The consequences of this for the country's economy are the most destructive. Production costs in other sectors are increasing, non-payments are growing, and interregional ties are paralyzed. And this is not an abstract theory. The entire Russian business press in recent years has been full of complaints from industrial enterprises about inflated railway tariffs, ultra-fast rising energy prices, and so on.
At the same time, the natural nature of the monopoly position, although it creates opportunities for effective work, does not at all guarantee that these opportunities will be realized in practice. After all, there is a mechanism of x-inefficiency. Indeed, in theory, RAO UES of Russia could have lower costs than several competing electricity firms. But where are the guarantees that it wants keep them to a minimum, and, say, will not inflate the costs of the top management of the firm. In the real history of RAO "UES of Russia", in particular, there was a case when the expenses of the company included the payment for the flight to the USA by the special plane of the mother-in-law and the dog of the general director of the company.
The main way to combat the negative aspects of natural monopolies is to state control over the pricing of natural monopoly goods and / or over the volume of their production (for example, by determining the range of consumers subject to mandatory service).
2.6.2. Maximizing production levels
Price regulation of the activities of natural monopolies presupposes the compulsory fixation of the maximum value of prices for the products of the monopolist. Moreover, the consequences of this regulatory measure directly depend on the specific level at which prices will be fixed.
Rice. 2.1. Regulation of prices for products of a natural monopoly in order to maximize production
In fig. 2.1 shows a common regulation option, in which the highest acceptable price is fixed at the level of the intersection of marginal costs with the demand curve (P = MC = D). The main consequence of setting the maximum price from the point of view of the behavior of the monopolist firm is the change in the marginal revenue curve. Since the monopolist cannot inflate the price above the named level, even with those volumes of production where the demand curve objectively allows it to do so, its marginal income curve from the MR position shifts to the MR 1 position (highlighted in the graph by the bold line), which coincides with the maximum allowed price value R. Indeed, if the maximum price of electricity is fixed at 21 kopecks. per 1 kW / h, then each additional kilowatt sold will generate income equal to this amount, and the marginal income curve will degenerate into a horizontal straight line passing at this level.
Further, the rule MC = MR comes into force. Like any other firm, the monopolist himself without any state coercion(which is a major advantage of this regulation technique!) will strive to bring the volume of production to Q M, corresponding to the point of intersection of the curves of marginal income and marginal costs. In fig. 2.1, other advantages of this method of limiting monopolistic prices are clearly visible: a significant increase in production is achieved (Qreg> Q M) and prices are reduced (Preg< Рм).
But the described regulation method also has a drawback: the price level set by the state has nothing to do with average costs, i.e. he can, by the will of the state, secure both the receipt of economic profits (Fig. 2.1a), and incurring losses (Fig. 2.1b). Both options are undesirable. Having a natural monopolist has permanent economic profits is tantamount to a consumer tax. Paying inflated prices, they increase their costs with all the ensuing negative consequences (reduced demand for their products, reduced competitiveness, etc.). But even more dangerous, perhaps, is the consolidation of losses. The natural monopolist can cover them in the long-term aspect only at the expense of state subsidies, otherwise it will simply go bankrupt. And this opens up a wide road for extravagance. As soon as there is no hope for profit one way or another, and the state will cover the losses anyway, the monopolist can gain profit only by squandering public funds. High salaries for managers, bloated staffs, huge entertainment expenses - all these are hidden forms of enrichment at the expense of the treasury. In other words, x-inefficiency in this case reaches its highest level.
2.7. Ensuring self-sufficiency
Another guideline for setting maximum prices can be the point of intersection of the average cost curve and the demand line (P = ATC = D). Since the average costs in this case are exactly equal to the selling price, the natural monopolist works in this case without losses or profits. Thus, the main problem of the previous regulation method is removed.
In fig. 2.2 it can be seen that this approach to regulation also solves the problem of increasing production (Qreg> Q M) and lowering prices (Рreg< Р M).
However, the MC = MR rule this time acts against the regulatory authorities. Up to the point of intersection of the marginal cost curve and the new marginal revenue curve MR, conditioned by government fixing of prices, the increase in production is beneficial to the monopolist. But after this point (N), each excess product produced will cause more costs than it will generate income (MC> MR). Obviously, the monopolist by hook or by crook will try to stop production at the Q N level and not bring it to Qreg. Since the demand at the price P will be exactly Qreg, then there will be a deficit in the market (Qreg> Q N).
Rice. 2.2. Regulation of prices for products of a natural monopoly in order to ensure breakeven production
Citizens of large Russian cities experienced something similar in the early 90s. The Ministry of Railways stopped repairing electric trains, and fewer and fewer of them went online every day. There were, of course, "objective" reasons for this: vandalism of teenagers who broke seats and shattered windows, and a lack of funds for repairs. But all of them, as if by magic, disappeared (or at least ceased to affect the number of commuting trains) as soon as ticket prices were raised.
Thus, the second approach to price regulation is also not ideal. In its pure form, it causes shortages of goods and therefore requires additional coercive measures in relation to the monopolists. The most common of these measures in modern Russia is the compilation of lists of consumers, the supply of which is not allowed by the monopolist.
2.8. Reforming the structure of Russian natural monopolies
In addition to price regulation, a certain benefit - especially in our country - can be brought about by reforming the structure of natural monopolies. The fact is that in Russia, within the framework of a single corporation, both the production of natural monopoly goods and the production of such goods that are more efficient to produce in competitive conditions are often combined. This association is, as a rule, in the nature of vertical integration. As a result, a giant monopoly is formed, representing the whole sphere of the national economy.
RAO Gazprom, RAO UES of Russia, the Ministry of Railways - these are three whales of “Russian-style monopoly”, the clearest examples of such associations. RAO Gazprom, along with the Unified Gas Supply System of Russia (that is, a natural monopoly element), includes geological exploration, production, instrument-making enterprises, design and technological structures, facilities social sphere(i.e. potentially competitive elements). The Ministry of Railways is in charge of both infrastructure - railways, stations, information system - and non-monopoly activities - contracting and construction and repair organizations, catering establishments. Whole towns and cities are on the balance sheet of the ministry. RAO "UES of Russia" unites both power grids and power plants.
The essence of the reforms intensively discussed in our country is as follows: it is proposed to develop competition in those types of activities of natural monopolies where it can be achieved. So, the competition of different companies for the reception of sewage from each apartment of a multi-storey building is sheer nonsense. But the competition of firms providing the prevention and repair of water supply and sewerage systems in an apartment is probably the only way to protect the consumer from the arbitrariness of modern DEZ, REU, etc. Only in the presence of competition, tenants will not have to wait for weeks for a called plumber.
It is obvious, however, that the separation of the natural monopoly and potentially competitive sectors should not be forced and mechanistic. After all, not only competition, but also industrial integration has its potential to reduce costs. For example, will the efficiency of the energy industry increase if, instead of the current RAO UES of Russia, a national company that manages power transmission lines and a multitude of corporations that own power plants are created? Indeed, even in countries with very strict rules of antimonopoly regulation - Japan, USA, Germany - the main energy organization scheme is power systems, i.e. concentration in the same hands of generating capacities and transmission networks.
Moreover, the idea of unbundling the energy industry by creating independent regional energy systems requires a thorough study. The level of competition in the industry is unlikely to increase, but the isolation of the regions will increase. In addition, the unified energy system of the country provides savings, since it allows the use of the “dormant” capacities of the western regions during these hours to cover the daily peak of consumption in the eastern part of Russia and vice versa (the benefits of horizontal integration). Will it be possible to achieve such coherence in the work of independent regional energy systems?
When reforming Russian monopolists, one should also bear in mind their position in the international competition. For example, RAO Gazprom is the largest international corporation. Its restructuring could undermine Russia's position in the global gas market. On the whole, it is obvious that the reforms of the structures, including the natural monopoly sphere, should be carried out in stages, with great care and analysis of each stage of the transformations.
2.9. National or Private?
Finally, another tricky issue with natural monopolies relates to their status: should these companies be public or private? The origins of this problem are associated with the fact that natural monopolies, as we have seen, are a very specific subject of the economy, which never functions according to purely market principles. If natural monopolies exclude competition; if the consumer has absolutely no choice; if prices and production volumes are determined not by the game of market forces, but either by the arbitrariness of the monopolist, or by decisions of the state; if many other mechanisms of market functioning are violated. If all this is so, then is it not better to manage natural monopolies not as private, but as state enterprises?
Economics has not come up with an unambiguous answer to this question. In many developed market states, natural monopolies are nationally owned, but no less countries where they are private.
The usual arguments in favor of nationalization relate to the fact that it is easier for a state-owned enterprise to pursue government policy on prices, tariffs, production volumes, etc. (recall that the regulation of these parameters is inevitable in any case - both under private and state ownership). In addition, state property excludes monopolistic abuses with the aim of enriching the owners. Simply put, where a private monopolist will squeeze every penny out of consumers for the sake of his profits, the state monopolist is likely to take a moderate position. After all, profit is by no means his main goal. If the natural monopolist is unprofitable, then it is completely incomprehensible what can keep private capital in such an enterprise.
Arguments against nationalization are associated with fears of lowering the efficiency of the natural monopolist. Not having the need to focus first and foremost on commercial success, the director of such a firm turns into a government official. And he readily fulfills any, the most ridiculous instructions, as long as they correspond to the wishes of the authorities. Dependent sentiments are also on the rise in a state enterprise: there is nothing to be afraid of losses, everything will be covered by the budget. Finally, the danger of corruption increases: too large amounts of government, i.e. "No one's personally," the money goes through the cash desks of the monopolist. With the complex nature of the commercial activities of such firms, it can be difficult to keep track of this money.
Thus, both sides have serious arguments. In practice, the issue of property rights is most often resolved in the spirit of national traditions. Countries with a statist mentality prefer the nationalization of natural monopolies. In countries with strong individualistic traditions, on the contrary, they tend to favor private property.
CONCLUSION
Monopolies set output below effective volume by setting a price above marginal cost, which results in irrecoverable losses for society. The consequences of such a policy can be mitigated through prudent government action or, in some cases, by the monopolist himself through price discrimination. How common is the problem of monopoly?
In a sense, monopoly is quite common. Most firms control the price they set to one degree or another. Nobody forces them to set a market price for their goods, because they differ significantly from the products of other firms. Mercedes is not Samara, TV So ny - not at all Rubin. Each of these goods has a declining demand curve, which gives each manufacturer some degree of market power.
Yet firms with truly monopoly power over the market are rare. Few of the products are truly unique. Most have substitutes, which, if not completely identical to them, are very close. Company Nestle may raise the price of ice cream a little, but if its marketers “overdo it,” sales will plummet.
After all, market monopoly power is very relative. It is true that many firms have "some monopoly power. However, it is equally true that their monopoly power is limited. We would not make a big mistake in assuming that the markets in which such firms operate are competitive, even if this is not the case.
Monopoly is the only supplier in the market. Monopolies arise when a firm succeeds in acquiring a source of a key resource, acquiring exclusive supply from the government, or satisfying market demand at a lower cost than a few firms. Since the monopoly is the only supplier, the demand curve for its products is decreasing. When a monopoly increases production by one unit, it causes a decrease in the price of its goods, which reduces the income from the sale of products. As a result, the marginal income of a monopoly is always below the price of its commodity. Like a competitive firm, a monopoly firm maximizes profits by producing the volume of output at which marginal revenue equals marginal cost. The monopoly then sets a price corresponding to the demand for a given volume of output. Unlike a competitive firm, the monopoly price exceeds the firm's marginal revenue, and hence its marginal cost. The volume of production of the monopolist seeking the greatest profit lies below the level that maximizes the sum of consumer surplus and producer surplus. That is, when the monopolist charges a price above marginal cost, some consumers who value the product above marginal cost but below the monopoly price set will refuse to buy it. As a result, the activity of the monopoly leads to irrecoverable losses for society, similar to those that arise when the tax is imposed.
The government is responding to the problem of monopoly in one of four ways: using antitrust laws to increase the level of competition in the industry; regulates prices set by monopolies; transforms monopolies into state-owned enterprises; if the market fiasco is insignificant compared to the inevitable imperfections of politics, politicians can simply “go with the flow”. One method of increasing monopoly profits is to set different prices for the same product, depending on the willingness of different groups of consumers to pay for it. The practice of price discrimination leads to an increase in economic well-being, since the goods will be purchased by those buyers who would otherwise refuse to buy it. In the special case of perfect price discrimination, there is no irrecoverable loss. In the more general case of imperfect price discrimination, it can lead to both an increase and a decrease in welfare in comparison with the establishment of a single monopoly price.
It can be said that the output of the monopolist is "too small", and the price of its products is "too high." This forces society to look for ways to regulate monopoly, to achieve efficiency in the market. So, we have examined the essence and position of monopolies (especially natural ones) on the Russian market, their impact on the Russian economy, and the prospects for their reform. The modern approach to the regulation of natural monopolies, in our opinion, should be based on the provision according to which natural monopolies are an integral part of what J. Galbraith called a "planning system." In a modern highly developed economy, it includes the largest corporations. The laws of their behavior differ from the laws of functioning of the traditional market system playing a subordinate role in the modern economy. The market itself is unable to manage or control a "planning system". These functions can only be performed by the state and society as a whole. With regard to natural monopolies, such control should concern costs, prices and distribution of profits. Economic activity monopolies, including natural ones, should be considered in the context of the globalization of the world economy and the tightening of international competition between transnational corporations. It is transnational corporations that are the main actors in the global economy, accumulating most of the income generated in it. The creation and successful development of these companies require tremendous efforts, time, a favorable climate, support, including at the government level. National economy without such companies is doomed to a passive role in the global economic relations... Today in our country there is the only transnational company in the full sense that has an undeniable weight on the European continent - this is OJSC "Gazprom".
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The development of competition leads to the emergence of a market of imperfect competition, the highest form of which is monopolies.
Monopoly is often viewed as a new economic phenomenon. At the same time, it is usually assessed as an unnatural phenomenon.
Monopoly is an ancient form of material relations. They were already in Ancient Egypt 4 thousand years ago. Beekeeping was recognized as the monopoly of the pharaohs' economy. In ancient Greece, the kings had a monopoly on some trades and crafts. Then monopolies were an episodic, accidental, temporary phenomenon. She was sometimes called a regalia.
The practice of monopolies has been recognized by science since antiquity. It was analyzed by Aristotle: "But in general, as we said, it is beneficial in the sense of making a fortune if someone is able to seize any monopoly." Subsequent thinkers also paid attention to this type of material relationship. Many wrote about monopoly, which confirmed their growing importance in economic life. This is especially noticeable in the Middle Ages. F. Bacon wrote about the distribution of various monopolies in England in the 17th century. V. Petty also paid a lot of attention to monopoly. He considered primarily the trade monopoly from the point of view of taxation. He noted the monopoly of inventors, stating at the same time that sad fact to date: "It should be noted, by the way, that not many people who discovered something new have ever been rewarded with a monopoly ...".
In the 19th century, researchers (W. Sombart, Hilferding, etc.) examined the process of capitalism growing into monopoly capitalism, imperialism. Fourier pointed to many forms of monopoly relations, in particular, indirect, government, colonial, and maritime. P. Proudhon considered monopoly as a stage of economic development. “Monopoly,” he wrote, “is the fatal end of competition, which continually engenders monopoly as its negation; this is the justification for monopoly. " In general, "competition kills competition", and monopoly becomes the main one.
Analyzing the stages of economic development of P. Proudhon, B. Hildebrand wrote in 1848: “The monopoly that rivalry engenders by the constant denial of oneself, in turn, at the fourth stage of development is also necessary for the success of society, just as the division of labor was necessary at the previous stages. , cars and rivalry. "
W. Sombart analyzed monopoly capitalism. In the XX century, monopolies became the most important object economic science... At the same time, different interpretations of monopolies remain different, rather in terms of terminology than in the content of concepts.
Entrepreneurship (business) gives rise to capitalism, and the latter turns into monopoly capitalism, or imperialism. "... Concentration at a certain stage of its development by itself brings, one might say, close to monopoly." MI Tugan-Baranovsky was right - economists are missing the basic truth that "competition kills competition." The emergence of monopolies does not negate the preservation of simple competition: "Monopoly gives rise to competition, competition gives rise to monopoly."
Market monopolization is one of the most important economic laws. As the business market developed, the importance of monopolies grew. The reason for the monopolization of the market is the cheapness of the firm's goods, resulting from the level of its practical application of technology and industrial power. All of this peaked in the 20th century.
Monopolies have become the leading force of the market and society in general. Monopoly capitalism "... drags, so to speak, the capitalists, contrary to their will and consciousness, into some new social order, passes from complete freedom of competition to complete socialization." At the heart of modern meaning monopoly lies in the interaction of many immanent laws of economics, including the free market and the business market. They gave rise to market monopolization:
Labor -> Economy -> Economy -> Market -> Capital -> Accumulation -> Concentration -> Centralization -> Monopolization.
Interest -> Competition -> Monopoly
Monopoly is the highest form of competition. It is not possessed by all market participants, but only certain of their representatives - the winners of competitors, primarily large enterprises in the industry. Monopoly does not deny its predecessors, but builds on them and constitutes the economic structure of society. “In practical life we find not only competition, monopoly, their antagonism, but also their synthesis, which is not a formula, a movement. Monopoly produces competition, competition produces monopoly ... The synthesis is that a monopoly can only be maintained because it constantly enters into a competitive struggle. "
“Competition is turning into a monopoly. Monopoly cannot stop the flow of competition; moreover, it creates competition itself. ... The contradiction of competition lies in the fact that everyone should desire a monopoly for himself, while the whole society as such should lose from monopoly and therefore should eliminate it ... ”. These provisions of a century ago have not lost their significance today. In this regard, it is necessary to comprehensively study this form of privilege.
