Monopolies: examples in the world and in Russia

In economic theory, there are many different terms. However, the most capacious of them is the concept of monopoly. How correctly the use of this term and what its semantic meaning in one or another case depends directly on the context. This is due to the different interpretation of this concept.

The essence of the term

The word "monopoly" in Greek means "mono" - one and "polio" - I sell. This term means such a situation on the market when only one firm operates on it. At the same time, there is no competition or no similar products or services are produced by anyone.

The first monopolies in the history of mankind were created thanks to state sanctions. The government adopted laws giving a privileged right to any firm to trade with one or another commodity. However, the term "monopoly" has many definitions. According to one version, this is a certain state of the market, when the state or organization is given the exclusive right to conduct economic activities on it. In this case, the monopolist, in the absence of competition, determines the value of its own product or has a very significant effect on pricing policy. This definition of the term is a qualitative characteristic of the market.

The main signs of monopoly

Experts identify the following situations, which indicate the existence of a single economic firm:

• The presence of one or a very large seller;
• The availability of products that do not have competitive counterparts;
• The existence of high threshold criteria for entry of new enterprises into a similar segment of the market.

There are other interpretations applied to the term "monopoly". For example, this concept can mean a separate company, which is characterized by priority in the management of a particular market segment.

Variants of interpretations

The term "monopoly" is understood as:

• The state of either the market or one of its segments, in which only one player is present;
• The only company that produces and sells products created by it;
• The market with the only enterprise-leader present on it.

The uniqueness of a company is determined by many criteria. However, the most basic of these is the level of competition. It should be either low enough or absent altogether.

Classification

There are different types of monopolies. However, their classification is very conditional. This is due to the fact that some forms of monopolies can simultaneously belong to several of their types. So, allocate:

• Natural monopoly, when the economic entity occupies a privileged position in the market;
• A pure monopoly when there is only one provider of a certain type of service or goods;
• Conglomerate - these are several subjects of a heterogeneous type, but mutually financially integrated (for example, ZAO Gazmetall can serve as an example in Russia);
• Closed monopoly, which has protection against competition in the form of legal restrictions, patents and copyrights;
• An open monopoly, which is distinguished by the fact that there is only one supplier of the product on the market that does not have special protection against competition.

In addition to the above, there are other types of monopolies. Let us consider some of the types of this phenomenon.

Natural monopoly

Quite often in the market there is such situation when demand for any concrete goods is satisfied by one or several companies. In this case, there is a natural monopoly. Its reasons lie in the specifics of customer service and technological process.

In any state of our planet there are natural monopolies. Examples are telephone services, energy supply, transport, etc.

Natural monopolies also work in the sphere:

• Transportation of oil products, gas and oil through pipelines of main importance;
• Services to provide the public with public postal and electrical communication.

Take, for example, the power industry. There is also a natural monopoly here. Examples in Russia are 700 existing CHPPs, GRES and HPPs, which were merged into an open joint-stock company of RAO UES Russia. The company was formed in 1992, when fifty most modern power plants were withdrawn from the structure of the regional energies. To date, RAO UES Russia owns the entire network of power lines in the country.

The natural gas monopoly has not been bypassed either. Examples in Russia are eight gas production associations , as well as thirteen transport regional transportation companies united in RAO Gazprom. The share of this company accounts for one fourth of all revenues to the state budget.

Gazprom accounts for 56% of shipments to the Eastern and 21% to Western Europe. He also has assets abroad, which are shares in companies that own gas distribution and gas transmission systems.

The natural monopoly in Russia is the railway industry. The share of the track facilities of JSC Russian Railways, as well as the turnover of goods makes up 80% of all traffic in the country. The share of passenger traffic is also high. It is 41%.

There are other natural monopolies in Russia. Examples of this are OJSC Rosneft, OJSC Rostelecom, etc.

Examples of monopoly in the world of a natural species differ slightly from Russian ones. In the legislative acts of Western countries the following terms are used:

• Public service;
• Service, necessary to all;
• Network service, etc.

So, in Great Britain there is no legal fixation of the term "natural monopolies". Examples of societies that are "necessary for everyone" include railway structures, transmission and distribution of electricity, water supply and sanitation. And in France the term "natural monopolies" is fixed by the notion of "commercial and industrial public services". These are organizations working in the field of communications, rail transportation and electricity supply.

A natural monopoly in Germany is the situation where one company is able to meet the demand in the market by providing a product or service with a low, but at the same time providing a normal level of profitability at a price. This applies to pipeline and railway transport.

Artificial monopoly

This concept is very capacious. According to some experts, the natural monopoly described above is one of the subspecies of the economic (artificial) monopoly. In this case, we are talking about such companies that managed to win a leading position in the market.

How does an artificial monopoly arise? Examples of the emergence of the dominant enterprises indicate the probability of two ways to achieve the goal. The first of these lies in the successful development of production, as well as in the concentration of capital, and, as a consequence, in increasing the scale of activity. The second way is faster. Its basis is the centralization of capital, that is, the voluntary unification or absorption of bankrupt organizations. At the same time, the mass of small and medium-sized enterprises turns into a larger one. There is an artificial monopoly. It covers a certain segment of the market and has no competitors.

At present, artificial monopolies are widely spread. Examples of such associations are concerns, trusts, syndicates and cartels. Each entrepreneur seeks to win a monopoly position. It allows you to eliminate a number of risks and problems associated with competitors, and also take a preferred position on the market. In this case, the monopolist is able to influence other market participants and impose their own conditions on them.

The creation of an artificial monopoly can also take place in a different way. The state by its legislative acts is able to grant the right to produce products or provide services to only one enterprise. Thus, artificial monopolies also arise. Examples of this are in most countries of the world. These are organizations based on state preferences. The example in Russia is the company Mosgortrans. It provides the capital with ground transportation. At the same time, the government does not allow work on the market to other carriers, its competitors.

State monopoly

Its creation is carried out with the help of legislative barriers. The legal documents define the commodity boundaries of the monopoly entity and the form of control over it. In this case, one company is given the exclusive right to carry out a particular activity. These organizations are public. They are subordinated to the commanders, ministries, and so on. State monopoly groups enterprises of one industry. This leads to a lack of competition in the sales market.

There are state monopolies in Russia. Examples of activities regulated by legislative acts are listed below. They include:

• Activities related to trafficking in psychotropic and narcotic drugs;
• Work in the sphere of military-technical regulation ;
• Issue of cash and the organization of their circulation on the territory of Russia;
• Branding and testing products from precious metals;
• Production and turnover of ethyl alcohol;
• Export and import of individual goods.

Where is the state monopoly most clearly manifested? Examples of the use of administrative power can be seen in various fields. This is the Bank of Russia. He has a monopoly on the organization, circulation and issue of cash. This right is given to him by legislative acts.

In the field of health, there is also a state monopoly. Examples concern the production of medicines. Thus, FSUE "Moscow Endocrine Plant" possesses monopoly rights. He produces drugs that are used in various areas of health. This is psychiatry and gynecology, endocrinology and ophthalmology.

In the space industry there is also a state monopoly. In Russia, examples relate to various objects in this sphere, the brightest of them is the Baikonur cosmodrome.

Pure monopoly

Sometimes in the market there is a situation when in the consumer sphere there is a new company offering a newly created product that has no analogues. This is a pure monopoly. Examples of such situations are currently scarce. Today this phenomenon is rather rare. More often, several firms compete with each other. At present, as a rule, only with the support of the state can there exist a pure monopoly. Examples in this case can be given only for subjects offering their products on local wounds. The simplest of them, when the company dictates its price to consumers. However, the cost of services or goods of pure monopolies can be controlled by the state. At the same time, such business entities will be protected from entering into the scope of their activities of other sellers by state legislative acts.

A typical example of a pure monopoly is the activity of the company "Aluminum Company" (USA). In 1945, this firm completely controlled the extraction of bauxite in America. This natural fossil is the main raw material for the production of aluminum.

A vivid example of a net monopoly in Russia is local firms for electricity and gas supply to settlements. In addition, these are companies that have water networks. Utilities are the most successful examples of such business entities throughout the world.

Open monopoly

In the market there can be a situation when any company begins the production of a completely new product. But unlike a pure monopoly, the state does not protect it from possible competitors. In this case, there is an open monopoly, which can be attributed to one of the types of monopoly net. For some time the firm is the only supplier of a new product. Competitors of such companies appear on the market a little later.

If you give examples of an open monopoly, then it is worth remembering the company Apple, which was the first to offer the consumer a touch technology.

Bilateral monopolies

Sometimes in the market there is a situation when the goods are offered by a single seller, and demand exists from a single buyer. This is a bilateral monopoly. In this situation, the buyer and the seller know each other. At the same time, they conduct the purchase and sale of finished products under strict price control. Examples of a bilateral monopoly relate to such situations when a firm sells its goods to the state. This is the purchase of weapons by the Ministry of Defense, and the opposition of a single trade union to any one employer.

Conclusion

Classification of monopolies is conditional. Some companies are very difficult to attribute to one type or another of economic entities. Many of them belong to several types of different monopolies. An example of this can serve as business entities, serving telephone networks. This includes gas and electric companies. All of them have signs not only of a natural, but also of a closed monopoly. Examples can relate to other areas of activity.

However, often the position of the business entity is radically changing. Thus, the existing advantages of natural monopolies are not their integral part. The situation on the market of such business entities may undergo changes when developing the latest technologies by competitors. The situation of closed monopolies is also not stable. All the benefits and privileges granted to them can be canceled by the newly introduced legislative acts.