Absolute monopoly and economic consequences of monopolization of the market is the Abstract , page 1

monopoly and economic consequences
monopolization of the market

The contents


features of absolute or pure monopoly.
Efficiency absolute

and negative effects of monopolization

2.1 Positive
side monopolization of the economy……………….17

Negative factors of monopolization

3.Antitrust and Antimonopoly
regulation: world experience and features
in Russia……………………..23

of sources used and


The relevance of the study.

The problems of monopolization of economic
life, the competition on commodity markets
today attract attention
not only specialists but also a wide
segments of the population.

In competitive markets, many companies
offer substantially homogeneous
products, so each firm has
negligible impact on the price which it
takes as given. On the contrary, monopolynot directly
competitors, therefore, it
the effect on the market price of the products.
While a competitive firm
is the host the price monopoly
sets the price on offer
to market the products.

Require special consideration so
called absolute or pure
monopoly, the existence of which
the most serious impact on economy
of a state, or even
of the whole region.

In this
the work will be consequences
establishment of the power of the firm over the market.
Power over the market leads to a change
the ratio of the prices of products and costs
company. A competitive firm takes
the price of manufactured products as
this, and then selects such a volume
the price of the product
equal to its marginal cost. On the contrary,
the price charged by a monopoly exceeds
its marginal cost.

the establishment of monopoly high prices
for products unlikely to cause
surprise. It may seem that
buyers have no other choice but
to buy the goods at the price that
establish a single provider.
Monopolies do not have the ability
to achieve any of their desired level
income, because a higher price leads to
decrease of quantity of goods purchased
buyers. Although the monopoly and
controls the price of goods, but its profit

Learning solutions
monopolies on the production volume and purpose
prices, we will examine the implications
the existence of monopolies to society
in General. The firm-monopoly, as well as
competitive firms, aim
maximize profits. But the movement to
the same purpose entails a very different
consequences. Exclusively
the selfish interests of buyers and
sellers in competitive markets
regardless of their faith going
the “invisible hand” to ensure
universal economic prosperity.
But because the monopolies are managed
avoid the control of competition, the result
market activity in the case of a monopoly
often does not meet the interests of all

The government
sometimes it is possible to improve
the performance of the market. Analysis
which will be in this
the work will expand our knowledge of the “visible
the hand of the state.” Studying emerging
in connection with the activities of monopolies
problems, we will discuss various ways
which politicians in power,
react to their appearance.

The aim of this work
the establishment of indicators of absolute
monopoly and consideration of economic
consequences of monopolization of the market

In connection with
this work was based on the following

1.To consider
the concept of monopoly and to identify signs
absolute or pure monopoly

2.To identify
positive and negative factors
monopolization of the market

3.To consider
state regulation and
antitrust policy in the world and
the example of Russia.

documents made by the Antimonopoly
policy in the Russian Federation, schemes
and graphs showing the consequences of
monopolization of the market

exploration of this topic
despite the large number of sources
remains low.

used the works as the Russian
and foreign authors, conducting
macroeconomic analysis of monopolization

features of absolute or pure monopoly.
The effectiveness of absolute monopoly.

Market model
perfect competition assumes
many assumptions which are not always
implemented. More of the same
adequate to reality is the model
market of imperfect competition.

The essence of the mechanism
market imperfect competition the most
fully disclosed criteria
determine the types of market structures.
The most important of them are: number of firms
enter the industry; the nature of the manufactured
products; barriers to entry when you join
in the industry; the degree of control or power
over priced.

a serious setback to
access of new firms to the market, where
economy “old-timers” of the industry,
are entry barriers:

1. The government
gives the firm exclusive rights
for certain types of activities
by issuing diplomas, licenses,
competitions, certifications.1

2. Property
for rare and non-reproducible resources.
Thus, the institution of private property
used monopoly as a means
the most effective barriers to
potential customers.

3. More
rights and patents.

4. Effect
scale, i.e. advantages of a big
production to increase
production volumes and reduce costs.

5. Illegal
methods of dealing with potential new
competition (anti dumping
price pressure on suppliers of raw materials,
poaching of employees, threats
mafias, etc.).

The analysis of input
barriers helps to explain why so
different market concentration in different
sectors of the economy, and the reasons
deviations from the perfect market model
perfect competition, where there
many of atomized firms.

economic theory distinguishes in
the framework of imperfect competition it
three varieties:

1. Clean
or absolute monopoly (from the Greek.
is the only one, “polio”
– sell);

2. Oligopoly
(from Greek “oligos”
– few, a few);

3. Differentiation
product through which develops
numerous competition.

In the first
(purely monopolistic
competition) for any particular
the market establishes the domination of one
manufacturer (seller) or one
the buyer (in this case, use
the term “monopsony”) that generates
the absolute power of such a monopolist
(monopsonist) over prices.

For example,
if a small town only
a “serious” company, for example,
Creamery, it can be
a monopolist in the local market of dairy
products and monopsonist on the market
labour as the largest buyer

the phenomenon of imperfect competition,
almost never occur in practice,
means the complete lack of competition
and may be viewed as yet another
a purely abstract model of the market.

to manufacture and market basic
characteristics of monopoly are: high
the concentration of economic activity
in the hands of one or more United
firms; dominant, i.e. the dominant
the position of these firms in the market specific
economic benefits; establishing
monopoly prices (inflated by the sale
and/or understated when buying goods)
and because of this, getting for yourself
superprofits. The essence of action
monopoly is that,
deliberately reducing the number of its
sales and thereby creating an artificial
gap in the market, it is working to improve
prices. Monopsonist, on the contrary, decreases
purchases from its suppliers (for example,
grain, milk, potatoes from the farmer),
creates artificial difficulties
distribution of products, thereby forcing
lower prices.

Given the
the circumstances in virtue of which one
firm may be the only seller
economic benefits in the market, in
economic theory allocate such
types of monopolies: indoor, outdoor,
natural, organizational, simple.

a monopoly protected from competition with
by using legal restrictions
(patents, government licenses,
permission of the Institute of copyright and
etc.). So, in most countries, the state
has the exclusive right to
the production of medicines,
the sale of arms, etc.

Open or
accidental monopoly. In this case, the firm
for a while it becomes the only
supplier of any economic
good, not having any special
protection from competition. In such a situation
often firms for the first time
appeared on the market with new products.

monopoly – industry in which long-term
average costs reach the minimum
only when one firm serves
fully the entire market. In this industry
minimum efficient scale
production is close (or even surpasses)
the amount by which the market imposes
the demand at any price, are sufficient to
cover the costs of production. In this
the case of the disaggregation of firms will lead to
the loss of efficiency and savings
economies of scale. With natural
monopolies, which are based on
savings on production scale
closely related to monopoly based
on the possession of unique natural

monopoly – a monopoly that sells
at any given point in time their
products at the same price to all

(man-made) monopoly is
a large cross-sectoral associations,
created with the aim of maintaining
any level of prices or division
together profits. Such
enterprises are created deliberately by
concentration in one’s hands a certain
economic-management activities.
In addition, for super-profits
and strengthen the bargaining power of the strong
of the company or inhibit its competitors
(via dumping or boycott); or
carry out so-called hostile
the absorption of rivals (buying their shares,
sometimes anonymously); or voluntarily
are combined with each other (often by
exchange of shares) to various
unions not to compete, and
orderly and profitable to co-own
market; or create so-called
affiliates, branches.
Historically, three main forms
Union monopoly: cartels,
syndicates and trusts. The main differences
between them lie in the breadth agreements
between the participants and the “density” of their
combining This classification of types of
monopolies are rather conventional. Some
firms may belong to both
several types of monopolies. To them
number, for example, include firms,
service telephone system,
as well as electric and gas companies,
which can be referred to as
natural monopolies (as
there is the effect of savings on
scale) and closed (because
there are barriers to competition).
Classification of monopolies can be
performed with reference to time intervals.
For example, patent certificate
does the firm closed a monopoly in
the short time interval, but
such a monopoly may be open
in the long interval due to
the limited term of the patent,
and also due to the fact that competitors can
to invent a new economic benefits.

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