What is a monopoly and how to fight it?

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:54

The concept of monopoly has been known to people since ancient times. Today, in an era dominated by market relations, it is useful to know what a monopoly is. It is understood as a situation on the market when a single firm produces a certain product or provides a service that has no analogues, and the emergence of competitors in the industry is impossible.

At the same time, buyers have no choice, they are forced to purchase products only from a monopoly company. As a rule, absolute monopoly is an abstract concept, since in the absence of competitors, their presence in other countries is not excluded.

Having clarified what a monopoly is, let's look at the variety of its types:

- closed, protected from competition by legal restrictions;

- a natural monopoly is a large firm that produces products at lower costs than several small companies;- an open monopoly is not protected from competition, the firm in this case is a temporary unique supplier of some product.

This classification is rather arbitrary, because some companies may besimultaneously to different types of monopoly. Gas companies or telephone companies are examples of this.

Now consider what a monopoly is, given the time horizon. Monopoly planning can be short-term, medium-term and long-term. For example, with the help of a patent certificate, a firm obtains a closed monopoly for a short time period. This is not only due to the limited duration of the patent, but also due to the possibility of competitors inventing new products.

There is also a bilateral monopoly in the labor market. This is a situation in which there is a single seller on the supply side and a single buyer on the demand side. In such conditions, the volumes of goods and prices are determined by the parties in the course of negotiations. An example of such a monopoly is a bakery, the only one in the city whose flour is produced by a single mill.

Monopoly in the labor market can be represented by a situation in which the employee is talented and has unique abilities. In this case, the monopoly is a manifestation of market power on the part of the supply of labor. For example, a musician or a writer, having a copyright, acts as a temporary monopoly. The longer the copyright lasts, the more significant the income from the product of his mental efforts.

What is a monopoly in Russia and what are its features? The first monopolies in our country arose at the end of the 19th century, among which was the Union of Railmanufacturers who carried out the construction of railways. After the October Revolution of 1917, the monopolies were abolished. Now in Russia a new form of this phenomenon is emerging - a formal corporate one. It is characterized by a large number of shareholders, and the main role in the fate of the company, as a rule, is played by managers.