In today's world, economists consider monopoly a brake on progress. According to them, it is not able to force the monopolist to modernize and improve production processes.
One cannot but agree with this position, but it is worth adding that there are areas of production in which it is impossible to do without a monopoly. Moreover, if the market is demonopolized in specific sectors of the economy, this promises a sharp rise in the cost of services.
How to manage a monopoly?
If it is impossible to do without a monopoly, then the corresponding question arises about the methods and ways of controlling the operations that are carried out in such a market. Indeed, without this, prices may rise unreasonably, and product quality will decline.
In this case, the main instrument of control of such enterprises is the state regulation of the monopoly. With the help of relevant legislation, the state sets certain conditions beyond which the enterprise cannot go.
If we consider the state monopoly, thenit's not so clear-cut here. After all, who, if not the state, can produce mass-produced goods at preferential prices with the help of its resources? Perhaps no commercial enterprise can do this, because it will lose the source of financing its production costs. In socially significant areas, state assistance is indispensable.
The concept of state monopoly
So, before proceeding to the analysis of this issue, we should first analyze the concept itself. A state monopoly is a type of imperfect competition in which the state itself is the monopolist.
This may be due to a fairly large number of factors: protecting the weak sections of the population, obtaining an additional source of budget replenishment, a policy aimed at controlling those sectors of the economy that are most interesting to the state.
In what areas can a similar condition be observed?
Generally, the state monopoly of most countries extends to the following services and goods:
- consumer goods;
- drugs;
- alcoholic products;
- tobacco products;
- sale of certain goods abroad;
- minerals, etc.
In other words, the state monopoly is a tool with which the state can manage sectors that are strategically important to iteconomy.
Who is the subject of the state monopoly?
This definition is called an enterprise or organization that is granted the privilege of functioning in a monopoly market.
Most often, the subject of state monopolies is an open joint-stock company, the controlling stake of which is owned by the state. But it can also be an organization in which there is no state share at all. Typically, such organizations must obtain certificates, licenses and other permits to carry out activities that fall under the concept of a monopoly.
How is it different from a natural monopoly?
Natural monopoly is formed in a natural way to reduce the level of costs and, accordingly, reduce the price of a product or service. For clarity, imagine: if each carrier wanted to build its own railway station and its own railway, this would force it to include such costs in the price of each ticket, which would lead to a significant increase in the fare.
A state monopoly is formed by creating appropriate laws and regulatory framework that defines such a market, methods and mechanisms of doing business on it, as well as methods of control.
Despite the fact that the market assumes the existence of only one enterprise that produces the corresponding goods, natural and state monopolies differ precisely in the order of formation,methods of control, as well as regulation.
Absolutely all monopolists fall under the attention of specialized bodies that check their behavior on the market, the validity of the cost and quality of services and goods.
State regulation of natural monopolies consists of the following points:
1. Identification of those areas of activity in which there is a monopoly.
2. Checking, comparing, analyzing and approving prices for goods and services provided by a monopoly enterprise.
3. In cases of need - a change in the rules of functioning, trade or a forced change in product prices.
How is it different from a natural monopoly?
If we compare state regulation of natural monopolies with those cases when the state itself is a monopolist, then often there is a problem with the availability of commercial information about the activities of the enterprise.
If, in the case of a natural monopoly, an enterprise must provide information about its income, expenses, profits and other financial flows, then with a state monopoly, the enterprise has practically no opportunity to obtain such information.
A monopoly established artificially by the state is considered closed, because no one can influence it from the outside.
What are the types of government monopoly?
It can be legal and justified, or it can be artificially created for money launderingfunds, which is proved by numerous facts of persecution of ex-officials in various countries.
Across the world, a monopoly on the distribution of medicinal preparations that contain narcotic substances is considered justified. For example, the state monopoly in Russia on the distribution of such substances is the only sure way to protect the population from the potential harm of these drugs. What would happen if everyone had access to such substances? Who would prevent someone from making drugs from narcotic preparations? Given that even if there is a closed market in the country, there are shadow supply and trade channels, the entry of narcotic substances into the legal market would be accompanied by a massive increase in the number of drug addicts.
It turns out that by artificially narrowing the number of participants in this market, Russia manages to achieve a relatively low level of use of various drugs for illegal purposes.
State control in some markets is a condition for the safety of the population of the country
A similar example would be the state monopoly of foreign trade in weapons, as well as other military devices. There are already enough dangerous conflicts in the world, both between different countries and within them.
In this situation, the free trade in weapons will simply be inappropriate - it can undermine the foundations of the national security of countries.
But by no means all states, creating a pure monopoly, act for good purposes. There are many examples whenofficials conspired to create a cartel or a syndicate, with the help of which various financial frauds were carried out.
What does it look like? For example, a group of deputies representing the interests of big businessmen can write and pass a law that can create a pseudo-monopoly market in favor of their patrons. This has been done more than once in countries close to the Russian Federation.
Monopoly is a forced measure
Of course, under conditions of perfect competition, progress in production, improvement of work processes, growth in product quality against the backdrop of lower manufacturing costs are much faster than under conditions of a monopoly, especially a state one.
At the same time, the state monopoly is very often used as a tool to increase loy alty to politicians. For example, an unreasonable reduction in prices for goods or services is applied. If the structure is strong, then it will be able to endure such measures for some period.
In fact, such an understanding of the market is erroneous, as it leads to unprofitable enterprises. As a result, he will need new injections from the budget.
For example, consider companies that operate in the oil and gas sector. This sector of the economy is the main breadwinner of the Russian Federation. Oil and gas are the resources that Russia supplies to foreign countries in huge quantities. The volumes are so large that if supplies were to stop, it would threaten to stop many enterprises around the world that use oil and gas inraw material quality.
The whole seriousness of this source of income stimulates the country to the fact that it needs to exercise full control over everything that happens on the market. And it is much easier to control one of the state enterprises or a group that works according to an agreed scheme than dozens of commercial organizations. Moreover, the presence of private structures in large numbers would not lead to an improvement in product quality.
From this we can conclude that the state monopoly in the Russian Federation is a necessary way to exercise control in state-important sectors of the economy.
