Types of competition perfect distinguishing features. Competition and market structure. Types of imperfect competition

Competition can only exist under certain market conditions. Different types competition (and monopoly) depend on certain indicators of the state of the market. The main indicators are:

1. the number of sellers and buyers;

2. the nature of the products;

3. conditions for entry/exit to the market;

4. information and mobility.

The above characteristics of market structures can be summarized in the following table, see Gukasyan G.M., Makhovikova G.A., Amosova V.V. Economic theory. - St. Petersburg: Peter, 2003.:

Market structure	Quantity sellers and buyers	Character products	Entry conditions/ market entry	Information and mobility
1. Perfect competition	Many small sellers and buyers	Homogeneous	Just. No problem	Equal access to all kinds of information
Imperfect competition: 2. Monopoly	One seller and many buyers	Homogeneous	Entry barriers
3. Monopolist. competition	Many buyers; large but limited. number of sellers	Heterogeneous	Separate obstacles at the entrance	Full information and mobility
4. Oligopoly	Limited. number of sellers and many buyers	Diverse and homogeneous	Possible individual obstacles at the entrance	Some restrictions regarding information and mobility

Perfect competition.

Consider the characteristic features perfect competition.

1. The main feature of a purely competitive market is the presence of a large number of independent sellers, usually offering their products in a highly organized market. Examples are the agricultural commodity markets, the stock exchange and the foreign exchange market.

2. Competing firms produce standardized, or homogeneous, products. At a given price, the consumer does not care which seller the product is purchased from. In a competitive market, the products of firms B, C, D, E, and so on, are viewed by the buyer as exact analogues of the product of firm A. Due to the standardization of products, there is no basis for non-price competition, that is, competition based on differences in product quality, advertising or sales promotion.

3. In a perfectly competitive market, individual firms exercise little control over the price of output. This property follows from the previous two. Under perfect competition, each firm produces such a small fraction of its total output that an increase or decrease in its output will have no appreciable effect on the total supply, and hence the price of the product. A separate competing manufacturer agrees on a price; competitive firm cannot set the market price, but can only adjust to it.

In other words, the individual competing producer is at the mercy of the market; the price of a product is a given quantity, which the producer has no influence on. A firm can get the same unit price for either more or less output. Asking for a higher price than the current market price would be useless. Customers won't buy anything from Firm A for $2.05 if its 9,999 competitors sell an identical product, or an exact substitute, for $2.05 each. Conversely, because firm A can sell as much as it thinks it needs, at $2 a piece, there is no reason for it to charge any lower price, such as $1.95. Because it would cause a decrease in its profits.

4. New firms are free to enter and existing firms are free to leave perfectly competitive industries. In particular, there are no major obstacles - legislative, technological, financial or otherwise - that could prevent the emergence of new firms and the sale of their products in competitive markets.

Imperfect Competition.

Imperfect competition has always existed, but it became especially acute in the late 19th and early 20th centuries. due to the formation of monopolies. During this period, there is a concentration of capital, there are joint-stock companies, control over natural, material and financial resources is being strengthened. The monopolization of the economy was a natural consequence of a large jump in concentration industrial production under the influence of scientific technical progress. Professor P. Samuelson emphasizes this circumstance: “Economics large-scale production, perhaps, certain factors leading to the monopolistic content of a business organization are inherent. This is especially evident in the rapidly changing field of technological development. It is clear that competition could not exist for a long time and be effective in the sphere of countless producers” Samuelson P. A. Economics. T.1.M.: 1993, p.54.

Most cases of imperfect competition can be explained by two main causes. First, there is a tendency to reduce the number of sellers in those industries that are characterized by significant economies of scale and cost reduction. Under these conditions, large firms are cheaper to manufacture and can sell their products at a lower price than small firms, which leads to the "crowding out" of the latter from the industry.

Second, markets tend to be imperfectly competitive when there are difficulties for new competitors to enter an industry. So-called "barriers to entry" may arise as a result of state regulation limiting the number of firms. In other cases, it may simply be too expensive for new competitors to "break through" into the industry.

In theory, there are different types of markets with imperfect competition (according to the degree of decreasing competitiveness): monopolistic competition, oligopoly, monopoly.

Consider the characteristic features monopolies .

1. Monopoly is an industry consisting of one firm. One firm is the sole manufacturer of a given product or the sole provider of a service; therefore, firm and industry are synonymous.

2. It follows from the first sign that the monopoly product is unique in the sense that there are no good or close substitutes. From the buyer's point of view, this means that there are no viable alternatives. The buyer must buy the product from the monopolist or do without it.

3. We emphasized that an individual firm operating in conditions of perfect competition does not influence the price of the product: it "agrees with the price." This is so because it provides only a small fraction of the total supply. In stark contrast is the pure monopoly that dictates the price: the firm exercises considerable control over the price. And the reason is obvious: it produces and therefore controls the total supply. With a downward-sloping demand curve for its product, the monopolist can cause a change in the price of the product by manipulating the quantity of the product supplied.

4. The existence of a monopoly depends on the existence of barriers to entry. Whether economic, technical, legal or otherwise, certain barriers must exist to keep new competitors from entering the industry if the monopoly is to continue.

When monopolies produce a good that buyers cannot resell, they often find it possible and profitable to charge different prices to different buyers, thereby effecting price discrimination. Price discrimination- sale of individual units of goods (services) produced with the same costs at different prices to different buyers Gukasyan G.M., Makhovikova G.A., Amosova V.V. Economic theory. - St. Petersburg: Peter, 2003, p. 261.

Differences in price reflect, in this case, not so much any differences in quality or costs of production for buyers, but the ability of the monopoly to set prices arbitrarily.

Depending on the method of implementation of price discrimination, it is divided into three categories (degrees).

1. Price discrimination of the first degree (perfect price discrimination) - the sale of each unit of goods at its own price, equal to the demand price for it, leading to the monopolist withdrawing all the buyer's surplus.

In its purest form, perfect price discrimination is difficult to achieve. Approximation to it is possible in the conditions of individual production, when each unit of production is produced by order of a particular consumer, and prices are set under contracts with customers.

2. Second degree price discrimination- sale of different volumes of goods (services) at different prices, so that the price of a unit of goods (services) is differentiated depending on the size of the lot. Second-degree price discrimination also includes the use of cumulative discounts depending on the time the goods (services) are sold.

3. Third degree price discrimination(market segmentation) - the sale of a unit of goods (services) at different prices in different market segments. Segmentation or division of the market into separate subgroups of buyers, each with its own specific characteristics of demand, allows firms to pursue a product differentiation strategy to meet the needs of different groups of buyers, increasing the sales opportunities for their products Gukasyan G.M., Makhovikova G.A., Amosova V. AT. Economic theory. - St. Petersburg: Peter, 2003, p.262.

The ability to engage in price discrimination is not readily available to all sellers. In general, price discrimination is feasible when three conditions are met.

1. Most obviously, the seller must be a monopolist, or at least have some degree of monopoly power, that is, some ability to control production and pricing.

2. The seller must be able to separate buyers into separate classes, in which each group has a different willingness or ability to pay for the product. This allocation of buyers is usually based on different elasticity of demand.

3. The original buyer cannot resell the product or service. If those who buy in the low price area of ​​the market can easily resell in the high price area of ​​the market, the resulting reduction in supply would increase the price in the high price area of ​​the market. The policy of price discrimination would thus be undermined. This correctly means that service industries, such as transportation or legal and medical services, are particularly susceptible to price discrimination. See McConnell Campbell R., Brew Stanley L. Economics: Principles, Issues and Policies. In 2 volumes: Per. from English. 16th ed. - M.: Respublika, 1993. .

Thus, it is possible to identify the main pros and cons of a monopoly. The main plus is that the scale of production allows you to reduce costs and, in general, save resources; the products of monopolistic companies are of high quality, which allowed them to gain a dominant position in the market. Monopolization acts to increase the efficiency of production: only a large firm in a protected market has sufficient funds to successful research and development. The main disadvantage is that monopolists tend to overprice and underestimate output; they make excessive profits, they are too reluctant to take risks.

Monopolistic competition refers to a market situation in which a relatively large number of small producers offer similar but not identical products. The differences between monopolistic and pure competition are very significant. Monopolistic competition does not require the presence of hundreds or thousands of firms, but rather a relatively small number of them, say 25, 25, 60 or 70.

Several important features of monopolistic competition follow from the presence of such a number of firms. First, each firm has a relatively small share of the total market, so it has very limited control over the market price. In addition, the presence of a relatively large number of firms also ensures that collusion, concerted action by firms to limit output and artificially raise prices, is almost impossible. Finally, given the large number of firms in the industry, there is no sense of interdependence between them; each firm determines its own policy, regardless of possible reaction from competing firms. The reaction of competitors can be ignored because the impact of one firm's actions on each of its many rivals is so small that those competitors would have no reason to react to the firm's actions.

Another difference between monopolistic and pure competition is product differentiation. Firms in conditions of pure competition produce standardized, or homogeneous, products; producers in conditions of monopolistic competition produce varieties of this product. However, product differentiation can take a number of different forms.

1. Product quality. Products may differ in their physical, or quality, parameters. Differences including features, materials, design and workmanship are critical aspects of product differentiation. Personal computers, for example, can vary in terms of hardware power, software, graphics output, and the degree to which they are "customer focused". There are, for example, many competing textbooks on the basics of economics, which differ in terms of content, structure, presentation and accessibility, methodological advice, graphs, drawings, and so on. Any city of a sufficiently large size has a number of retail stores selling men's and women's clothing, which differs significantly from similar clothing from stores in another city in terms of style, materials and workmanship.

2. Services. The services and terms associated with the sale of a product are important aspects of product differentiation. One grocery store may emphasize the quality of customer service. Its employees will pack your purchases and take them to your car. A competitor in the form of a large retail store may let customers pack and carry their purchases themselves, but sell them at lower prices. A "one-day" cleaning of clothes is often preferable to a similar quality cleaning that takes three days. The courtesy and helpfulness of store employees, the firm's reputation for serving customers or exchanging its products, and having credit are service-related aspects of product differentiation.

3. Accommodation. Products can also be differentiated based on placement and availability. Small mini-grocers or self-service grocery stores successfully compete with large supermarkets, despite the fact that they have much more wide range of products and charge lower prices. Owners of small shops place them close to customers, on the busiest streets, often they are open 24 hours a day. For example, the close proximity of a gas station to the interstate highways allows it to sell gasoline at a higher price than a gas station located in a city, 2 or 3 miles from such a highway, could do.

4. Sales promotion and packaging. Product differentiation may also result - to a large extent - from perceived differences created through advertising, packaging and the use of trademarks and trademarks. When a particular brand of jeans or perfume is associated with the name of a celebrity, it can affect the demand for these products from buyers. Many consumers find that toothpaste packaged in an aerosol can is more preferable than the same toothpaste in a regular tube. Although there are a number of medicines that are similar in properties to aspirin, creating favorable conditions for the sale and bright advertising can convince many consumers that bayer and anacin are the best and deserve a higher price than their more well-known substitute.

One of the important values ​​of product differentiation is that, despite the presence of a relatively large number of firms, producers in conditions of monopolistic competition have a limited degree of control over the prices of their products. Consumers give preference to the products of certain sellers and, within certain limits, pay a higher price for these products in order to satisfy their preferences. Sellers and buyers are no longer spontaneously connected, as in a perfectly competitive market.

From the foregoing, we can conclude that in conditions of monopolistic competition, economic rivalry is focused not only on price, but also on such non-price factors as product quality, advertising and conditions associated with the sale of the product. Because products are differentiated, it can be assumed that they can change over time and that each firm's product differentiation features will be susceptible to advertising and other forms of sales promotion. Many firms place heavy emphasis on trademarks and brand names as a means of persuading consumers that their products are better than those of competitors.

Oligopoly - A market structure in which most of the output is produced by a handful of large firms, each of which is large enough to influence the entire market through their own actions. Individual oligopolists can influence the price themselves, as in a monopoly, but the price is determined by the actions taken by all sellers, as in perfect competition. This makes the decisions of oligopolists more complex than those of firms in other market structures. Each firm has to make decisions not only about how customers will react to its actions, but also about how other firms in the industry will respond, since their response will affect the firm's profits.

Therefore, oligopolists have an aversion to price competition. This aversion may lead to some more or less informal type of price bargaining. However, usually secret agreements are accompanied by non-price competition. Typically, it is through non-price competition that the market share for each firm is determined. This emphasis on non-price competition has two main roots.

1. A firm's competitors can quickly and easily respond to price cuts. As a result, the possibility of a significant increase in anyone's market share is small; competitors quickly cancel out any possible increase in sales by responding to price cuts. And of course, there is always the risk that price competition will plunge participants into a disastrous price war. It is less likely that non-price competition will get out of control. Oligopolists believe that longer-term competitive advantage can be gained through non-price competition because product changes, manufacturing technology improvements, and good publicity gimmicks cannot be duplicated as quickly and as completely as price cuts.

2. Industrial oligopolists usually have significant financial resources to support advertising and product development. Therefore, although non-price competition is a core feature of both industries with monopolistic competition, and oligopolistic industries, the latter usually have more significant financial resources, which allow them to more closely engage in non-price competition.

Oligopolies can be homogeneous or differentiated, that is, in an oligopolistic industry, they can produce standardized or differentiated products. Many industrial products: steel, zinc, copper, aluminium, lead, cement, industrial alcohol, etc. - are standardized products in the physical sense and are produced in an oligopoly. On the other hand, many consumer goods industries such as automobiles, tires, detergents, postcards, corn and oatmeal for breakfast, cigarettes and many household electrical appliances, are differentiated oligopolies.

In oligopolistic markets, there are usually some entry barriers, but they are not so severe as to make entry absolutely impossible. High barriers to entry into the industry are associated primarily with economies of scale in production.

Thus, we have considered competition corresponding to different market structures. According to the degree of decreasing competitiveness, they can be listed in the following order: perfect competition, monopolistic competition, oligopoly and monopoly. We have found that the use of non-price competition methods is more characteristic of firms operating in an oligopoly or monopolistic competition. While in conditions of perfect competition and monopoly, this need is no longer necessary. In the next chapter, we will take a closer look at the issue of price and non-price competition.

Competition is a struggle between the participants economic activity for the best production and marketing conditions. Distinguish between perfect and imperfect competition.

Perfect Competition means that with complete mobility (mobility) of resources and goods, there are many sellers and buyers absolutely the same products who have complete market information and cannot impose their will on each other. The perfect competition market is actually an abstraction, since it is unlikely that at least one of the real markets corresponds to the described essence. If at least one of the conditions is violated, then imperfect competition . In imperfectly competitive markets, the degree of imperfection (ie, the ability to dictate one's own terms) depends on the type of market.

There are four main models (structures) of the market in terms of competition: these are pure competition, pure monopoly, monopolistic competition and oligopoly (the last three are imperfect competition).

Pure competition characterized by a large number

firms producing homogeneous (identical) products, the share of each firm in the market is very small, therefore they cannot influence the price, there are no barriers to entry into the market. Examples include markets for agricultural products under the dominance of farms, foreign exchange markets, since the conditions on them are close to the conditions of a perfectly competitive market.

Pure monopoly means that there is only one firm in the industry that produces a unique product that has no substitutes; entry into the industry is actually blocked, the firm's control over the price is significant, the maximum possible in market conditions. Examples include gas, water, electricity, transport, utilities. Barriers to entry of new participants in one or another of these industries are practically insurmountable. Monopoly can be natural or artificial.

A natural monopoly arises either when the production of a product requires unique natural conditions, or when the existence of several manufacturers in the industry is impractical. An artificial monopoly is created by the collusion of producers.

Along with pure monopoly, there is also pure monopsony. It occurs when there is only one buyer in the market. Monopoly benefits the seller, while monopsony benefits the buyer. There is also a bilateral monopoly, when there is one seller and one buyer in the industry. Such a situation, for example, is possible in the production of military products, when there is one manufacturing company and one customer of this product - the state. At the same time, the situation in the domestic market is considered. However, pure monopoly and pure monopsony are quite rare.

Monopolistic competition characterized by a large number of firms producing differentiated products. Differentiated products are products that satisfy the same need, but differ in quality, brand, packaging, after-sales service, etc. The market share of each firm is small, barriers to entry are easily overcome, and the ability of an individual firm to influence prices is narrowly limited. Examples are the production of clothing, shoes, books, retail etc.

Oligopoly means that there are few (several) firms on the market that produce the same or differentiated products, the share of each firm in the market is significant, it is difficult to enter the industry. An oligopoly is characterized by a significant influence of an individual firm on the prices of goods and strong interdependence firms in their market behavior. Examples are the metallurgical industry, the automotive industry, and the production of household appliances.

The transition to imperfect competition, monopolistic and oligopolistic structures took place in a market economy at the end of the 19th century. based on the concentration and centralization of production and capital as a result of competition itself. The reasons for the emergence of monopolies include:

Scale effect: as a result, there are natural monopolies- industries in which the existence of a single firm is economically rational, since products can be produced by one firm at lower average costs than if it were produced by several firms;

Scientific and technological progress, i.e. development of new products, technologies, etc.;

Exclusive ownership of some productive resource, for example, establishing control over all oil fields;

Exclusive rights granted to the firm by the state.

Monopolies, seeking to maximize profits, may reduce production and raise prices for goods, which is contrary to the interests of buyers and society as a whole.

The competitive market environment must be guarded against the emergence of a pure monopoly or oligopoly. This can be achieved only with the intervention of the state, through the conduct of antimonopoly policy.

Antitrust policy includes support for small and medium-sized businesses, the dissemination of scientific and technical information, the assumption of reasonable competition from foreign firms, the adoption and implementation of antitrust laws. One of the first antitrust laws appeared in the USA in 1890 (Sherman law). Antitrust law covers two main areas:

Regulates the structure of the industry - market share controlled by one firm, and mergers firms, primarily horizontal(in one industry) and vertical(along the technological chain from the extraction of raw materials to its processing and delivery of finished products to the consumer);

haunts unfair competition, for example, collusion on prices, buying up the assets of one company by another through nominees, etc.

The main purpose of the application public funds is to achieve the optimal combination of different types of competition and not allow one of them to suppress others and thereby weaken the overall efficiency competitive environment. For the formation of normally functioning competitive markets, appropriate the legislative framework and public institutions, effective monetary policy, measures to protect the interests of national producers in the world market. In modern Russian conditions the problem of protecting the competitive environment is quite acute, since the monopoly in many industries has been preserved since the days of the USSR. On March 22, 1991, the Law of the RSFSR "On Competition and Restriction of Monopoly Activities in Commodity Markets" was adopted, the first normative act in Russia, aimed at developing competition. This law is constantly being amended and supplemented as the market situation changes. The latest amendments were made on July 26, 2006. The Law and its addenda define the concepts of monopoly high and low prices, the concept of “dominant position” of an economic entity, etc. The law prohibits such entities from abusing their position in the market. Article 10 of the Law is focused on the suppression of unfair competition. Article 17 - to prevent monopoly and oligopolistic mergers. The extreme measure applied to business entities abusing their dominant position is the forced separation of business entities, as defined in Article 19.

The main difficulties in applying antitrust law are to determine the size of the market in which the company accused of monopoly operates and to prove the fact of unfair competition.

Competition is a struggle between commodity producers for the most profitable terms production and marketing of goods and services, between consumers for goods producers, as well as producers and consumers for sources of income.

There are types of competition (perfect and imperfect):

Perfect Competition(olipoly) - a state of the market in which there are many producers and consumers that do not affect the market price. This means that the demand for products does not decrease as sales increase.

The main advantages of perfect competition:

1) Allows you to achieve the conformity of the economic interests of producers and consumers through a balanced supply and demand, through the achievement of an equilibrium price and equilibrium volume.

1) Provides efficient allocation of limited resources due to the information embedded in the price;

2) Orients the manufacturer to the consumer, that is, to achieve the main goal, to meet the various economic needs of a person.

Thus, with such competition, an optimal, competitive state of the market is achieved, in which there is no profit and no loss.

Disadvantages of perfect competition:

1) there is equality of opportunity, but at the same time the inequality of the result is preserved.

2) benefits that cannot be divided and evaluated individually are not produced under conditions of perfect competition.

3) different tastes of consumers are not taken into account.

Perfect market competition is the simplest market situation that allows you to understand how the market mechanism really works, but in reality it is rare.

Imperfect Competition- this is competition in which producers (consumers) influence the price and change it. At the same time, the volume of production and access of manufacturers to this market is limited.

Basic conditions of imperfect competition:

1) There are a limited number of manufacturers on the market

2) There are economic conditions (barriers, natural monopolies, state taxes, licenses) for penetration into this production.

3) Market information is distorted and not objective.

All these factors contribute to the disruption of the market equilibrium, since a limited number of producers sets and maintains high prices in order to obtain monopoly profits.

There are 3 types:

1) monopoly,

2) oligopoly,

3) monopolistic competition.

28. Monopoly

Monopoly is the absolute predominance in the economy of a sole producer or seller of products.

We can distinguish the characteristic features of a purely monopolistic market:

1. There is only one seller on the market (mono - one, poleo - seller - Greek).

2. The company's product is unique; there are no close substitutes for it. In this regard, buyers have no choice of the seller.

3. The seller controls the price, dictates it to the market. He can maintain and even increase the price even when demand falls, by reducing the volume of production.

4. Barriers to market entry are insurmountable or extremely difficult to overcome.

A natural monopoly is a situation where one large firm in an industry will produce a good at a lower average cost than several smaller firms.

An artificial monopoly is a situation in which there is no reason for a natural monopoly, but there is only one firm in the industry, since one entrepreneur somehow gains control over the entire industry.

29. Pure monopoly and monopolistic competition. A pure monopoly is a market structure in which a product that has no close substitutes is sold by one seller, i.e. one seller confronts many buyers. Under conditions of pure monopoly, the industry consists of one firm, i.e. the concepts of "firm" and "industry" are the same. The prerequisites for the emergence of a pure monopoly are: - production of unique products (the absence of close substitutes) - the presence of low production costs associated with economies of scale; - exclusive right of access to any natural resources; - Availability state patents and licenses providing for the exclusive right to a given invention, industrial design or trademark, etc. All these factors allow the firm with them to take a dominant position in the market and are obstacles to the penetration of other firms into this market.

The signs of monopolistic competition can be formulated as follows:

o the market consists of relatively large the number of sellers, each of which has small(but not infinitely small) market share;

o transactions are concluded in a wide range prices;

o setting prices, sellers try to stand out for non-price features;

o each seller's product is an imperfect substitute for other firms' products;

o market has no barriers for entry and exit

Competition- a form of mutual rivalry of economic entities for achieving the best production conditions, for obtaining the greatest profit.

Methods distinguish between price and non-price competition.

Price competition involves selling goods or offering services at lower prices than competitors. In a developed market economy, price reductions can occur either by reducing production costs or by reducing profits. Small firms can only cut prices for a very short time for competitive purposes. Large companies may completely abandon profits for a long time in order to force competitors out of the market. In the future, they can significantly increase the price and compensate for the losses incurred. Price reduction in conditions of price competition usually occurs without a decrease in product quality and a change in the range of goods. There are cases in history when rivalry between companies in the course of price competition led first to the formation of a zero, and then a negative price (that is, competitors paid extra to buyers for taking goods from them).

There are also direct and hidden price competition. In conditions direct price competition the company openly announces price cuts for goods and services. At hidden price competition the firm improves the properties of its products, but increases the price by a disproportionately small amount of improvements.

Non-price competition involves the use of technological advantages, the provision of after-sales guarantees and services, product advertising, which ultimately leads to the offer of goods on the market more High Quality. In conditions of non-price competition, the manufacturer usually takes into account such factors as the environmental friendliness of the product, safety of consumption, and aesthetic properties. Trademarks and signs can be used as instruments of non-price competition. AT modern conditions non-price competition is much more important than price competition.

A special case of competition is unfair competition, which is, for example, the sale of goods at prices below costs, false advertising, industrial espionage, etc.

Allocate intersectoral, intrasectoral, functional, perfect and imperfect competition.

Intra-industry competition rivalry between producers of similar goods satisfying the same need.

Interindustry competition- competition between manufacturers of products that meet different needs. The competition in this case is highest profit. If one of the industries increases the amount of profit, there is an overflow of capital into this industry from less profitable industries.

Functional competition- competition between producers of a particular product.

Perfect Competition assumes the following conditions are met:

There are a large number of independent manufacturers on the market; the size of production of each is small relative to the size of the market - so none of them can affect the market price.

1. Competing firms in the market produce homogeneous products.

2. Buyers and sellers have full price information.

3. Sellers act independently of each other, without agreeing on prices.

4. Firms are free to enter and exit the industry.

In conditions of perfect competition, the firm cannot influence the market price of the product, the price is set by the market. It is not profitable for the manufacturer to lower the price below the market price. Since he is free to sell the commodity at a higher price; raising the price above the market also does not make sense. As buyers will purchase products from competitors at a lower price. The perfectly competitive demand curve is perfectly elastic and horizontal.

Imperfect Competition A market situation where at least one of the conditions for perfect competition is not met. In conditions of imperfect competition, the seller is able to manipulate the price and volume of production in order to maximize profits. There are the following basic models of imperfect competition: monopoly, monopsony, monopolistic competition, oligopoly.

When there is only one seller in the market, that seller has monopoly. In such a market, the seller can influence the price by controlling the volume of goods produced. The demand curve for the monopolist's product is the market demand curve. The decisions of a monopoly are influenced by the demand for its product, the price elasticity of that demand, marginal revenue, and the marginal cost of producing the good.

Perfect competition is characterized by the inability of individual sellers to influence the price of the product that each sells. No single competitive firm captures a large enough share of the market supply to affect price. Monopoly is characterized by the concentration of supply in the hands of the owners of a single firm. The monopolist maximizes possible profit by raising the price and reducing the quantity of goods on the market.

The monopoly model is based on a number of assumptions:

monopoly products do not have perfect substitutes;

There is no free entry to the market;

perfect awareness of the monopolist about the state of the market.

natural monopoly- this is a state of the commodity market in which the satisfaction of demand in this market is more efficient in the absence of competition due to technological features production, and goods produced by subjects of natural monopolies cannot be replaced in consumption by other goods, and therefore the demand for these goods depends less on changes in the price of this product than the demand for other types of goods.

This kind of commodity markets require special state regulation aimed at achieving a balance of interests of consumers and subjects of natural monopolies, ensuring, on the one hand, the availability of goods sold by natural monopolies for consumers, and, on the other hand, the effective functioning of the subjects of natural monopolies themselves.

The law names as natural monopolies: transportation of oil and oil products through main pipelines; transportation of gas through pipelines; services for the transmission of electrical and thermal energy; rail transportation; services of transport terminals, ports, airports; services of public electric and postal communication.

In order to regulate and control the activities of subjects of natural monopolies, federal bodies for the regulation of natural monopolies are formed, which, in order to exercise their powers, have the right to create their own territorial bodies and empower them within their competence.

Clean monopolist- the only firm in the market that is the buyer of the resource or its services offered on this market, and there are few or no alternative sales opportunities at all. The monopolist has the power to influence the price of the resource services it purchases. The service supply curve of the monopolist's resource is ascending, so the monopolist can influence the price of the purchased resource by changing the quantity purchased.

Monopoly power is the ability of a single buyer to influence the prices of the resources it purchases. When firms with monopsony power increase their purchases, the price they must pay increases. Since such firms buy up a significant part of the total market supply of the corresponding resource, the monopsonist firm cannot acquire all the resources it needs at the same price.

The following types of monopolies can be distinguished:

1. natural monopoly. It is due to the fact that over long time periods, the average costs in the industry will be minimal if it has one, and not several competing firms.

2. random monopoly. It occurs as a result of a temporary excess of demand over supply of a given product. It is temporary.

3. artificial monopoly. It arises as a result of restrictions on the release of this type of product by the state.

A monopolist is able to increase profits through "price discrimination" - selling the same product to different consumers at different prices. In this case, it is important for the seller to know whether the buyer's demand for this product is elastic or not. If the consumer's demand is inelastic, the monopolist can raise the price of the good - demand will decrease by a small amount. Accordingly, in the case of elastic demand for goods, the price should be reduced. A monopolist uses market segmentation to determine groups of consumers with elastic and inelastic demand. There is a danger that consumers who have received a product at a reduced price will resell it at a slightly higher price, but not as high as for other consumers. Therefore, the monopolist is forced to limit the sale of goods in one hand. Pure monopoly is more common in local markets than in national markets.

There are 3 types of price discrimination:

1. Each unit of goods is sold at the demand price for it, and since the demand price is different for different buyers, a discriminatory effect arises.

2. The price of products is the same for all consumers, but differs depending on the number of goods purchased.

3. Products are sold to different buyers at different prices.

Price discrimination can only occur if the seller is able to segment the market, i.e. one way or another to determine how elastic the demand of different buyers. It is necessary to find out the level of income of buyers, as well as how much time he has to complete a sale and purchase transaction, how important this product is for him, etc.

Price discrimination can be beneficial to both sellers and buyers. Sellers increase their income in this way, and many consumers, who would not be able to purchase products at a very high price, also become buyers.

Monopolistic competition occurs when many sellers compete to sell a differentiated product in a market where new sellers can enter.

The product of each firm trading in the market is an imperfect substitute for the product sold by other firms. Each seller's product has exceptional qualities or characteristics that cause some buyers to prefer its product to competing firms. Product differentiation means that the item sold on the market is not standardized. Differentiation may occur due to actual qualitative differences between products or due to perceived differences.

Product differentiation stems from many conditions:

features of the design of the goods;

its shape, color and packaging;

special trademark and trademark;

a special set of services accompanying the implementation this product;

specific location of the trade enterprise;

personal qualities of the seller (reputation, business dexterity).

There are a relatively large number of sellers in the market, each satisfying a small but not microscopic share of the market demand for a common type of product sold by the firm and its competitors. Under monopolistic competition, the size of the firm's market shares generally exceeds 1%, i.e. the percentage that would exist under perfect competition. In a typical case, the firm accounts for 1% to 10% of sales in the market during the year.

In cases where there is a possibility of diversification, the volume of sales of products depends on how successful the difference between this product and the competitor's product is, and how much this difference can interest buyers. An improvement, deterioration or change in a product does not necessarily go hand in hand with a change in price.

Although each seller's product is unique in a market with monopolistic competition, between various types products have enough similarities to group sellers into broad categories similar to the industry. Product group represents several closely related but not identical products that satisfy the same need.

Oligopoly- a market structure in which not many sellers are involved in the sale of any product, and the emergence of new sellers is difficult or impossible. The goods sold by oligopolistic firms can be either differentiated or standardized.

Typically, there are two to ten firms in oligopolistic markets that account for half or more of the total sales of a product. In oligopolistic markets, at least some firms can influence the price due to their large shares in the total output. Sellers know that when they or their rivals change prices or quantities of a product, the consequences will be on the profits of all firms in the market. Sellers are aware of their interdependence. Each firm in an industry is expected to recognize that a change in its price or output will elicit a reaction from competing firms. Individual sellers in oligopolistic markets must reckon with the reactions of their competitors. The response that any seller expects from rival firms in response to changes in the price set by him, the volume of output, or changes in marketing activities, is the main factor determining his decisions. The response that individual sellers expect from their rivals affects the equilibrium in oligopolistic markets.

The activities of an oligopoly include trying to control prices, advertise products, and fix output. The small number of competitors forces them to reckon with each other's reactions to their decisions. In many cases, oligopolies are protected by market entry barriers similar to those imposed by monopoly firms. A natural oligopoly exists when a few firms can supply an entire market at a lower long-run cost than many firms would.

Oligopolistic markets have the following common features:

1. There are only a few firms on the market. The product they produce can be either standardized or differentiated.

2. Some firms in an oligopolistic industry have large market shares, so some firms in the market have the ability to influence the price of a product by varying its availability in the market.

3. Firms in the industry are aware of their interdependence. Sellers always consider the reactions of their competitors when setting prices, sales targets, size advertising expenses or take other business action.

There is no single oligopoly model. A number of models have been developed to explain firms' behavior in specific situations, based on firms' assumptions about how their rivals will react. An oligopoly tends to reduce profits due to competition. The effect of oligopolistic rivalry on prices encourages firms to collude to reduce competition and increase profits.

oligonomy- a situation in the market when the market is controlled by several sellers and several buyers.

The goal of most mergers has been to create oligonomies: they are cyclical insulated because they can control both costs and prices. Small companies operating in such a market can choose one of three: become larger through the same mergers; acquire unique technology and become indispensable; sell goods directly over the Internet.

Duopoly- (from Latin: two and Greek: I sell) a situation in which there are only two sellers of a certain product, not interconnected by a monopolistic agreement on prices, markets, quotas, etc. This situation was theoretically considered by A. Cournot in the work “Research mathematical principles of the theory of wealth” (1838). Cournot theory is based on competition and is based on the fact that buyers announce prices, and sellers adjust their output to these prices. Each duopolist estimates a product demand function and then sets the quantity to be sold, assuming that the competitor's output remains unchanged. According to Cournot, the duopoly occupies an intermediate position in terms of output between complete monopoly and free competition: in comparison with monopoly, the output here is slightly higher, and compared with pure competition, less.

Within the framework of the first type of monopolistic activity, the most common offense in the relationship between sellers (suppliers) and buyers (consumers), whose ties are based on contractual relationship, is the manipulation of monopoly prices. It accounts for about 40% of all identified violations. Monopoly price- a special kind of market price, which is set at a level above or below the social value or equilibrium price in order to obtain monopoly income. As a rule, business entities establish monopoly high prices on their products in excess of the social value or possibly the equilibrium price. This is achieved by the fact that monopolists deliberately create a deficit zone, reducing production volumes and artificially creating increased consumer demand. The law defines a monopoly high price as the price of a product set by an economic entity that has a dominant position in the product market in order to compensate for unreasonable costs caused by underutilization production capacity, and (or) obtaining additional profit as a result of a decrease in the quality of the goods.

At a superficial glance, monopolistically high prices seem to be the most dangerous, directly working for the "pocket" of an economic entity to the detriment of its competitors. In fact, monopoly low prices often pose a much greater threat to free competition. Two variants are known.

The first is that the underpriced price of the purchased goods is set by an economic entity that occupies a dominant position in the commodity market as a buyer in order to obtain additional profit and (or) compensate for unreasonable costs at the expense of the seller. Such prices are imposed on weaker participants in market relations, as a rule, economic entities acting alone, which, when purchasing goods from them, cannot protect their interests by market means without outside interference. Lowering the price in comparison with the social value or the possible equilibrium price is achieved by artificially creating a zone of excess production.

The second variant of monopolistically low prices is that the price of a product is deliberately set by an economic entity that occupies a dominant position in the commodity market as a seller, at a level that incurs losses from the sale of this product. The effect of such a low price is or may be to limit competition by driving competitors out of the market. Low prices are able to establish and maintain a relatively long time, monopolizing the market for certain goods, only strong economic entities that can afford to trade "at a loss" for a long time. As a result, their competitors, unable to stand the test of price, go bankrupt or leave the market.

It should be borne in mind that economic entities can double the collected "tribute" through the so-called "price scissors": monopoly high prices are set for the products sold and monopoly low prices for the purchased ones. These price levels move away from each other like diverging scissor blades. Such a price movement is based on the expansion of zones of excess and shortage of goods. It is typical for many manufacturing enterprises, which, in conditions of inflation, raise prices for their finished products several times more than prices in the extractive industries. Often "price scissors" cut a good "tribute" from the peasants for the industry processing agricultural raw materials, at the same time ruining them and leading to the decline of agricultural production.

The aim is to create conditions for fair competition and prevent monopolization of the market. state antimonopoly policy. It performs the most important functions in the development of the national economy, as it creates conditions for increasing the competitiveness of the domestic manufacturer and the economy as a whole.

Problematic practical implementation antimonopoly policy is due to the fact that it uses mainly economic mechanisms that are not sufficiently developed in . Accordingly, the effectiveness of antimonopoly policy is determined primarily by the development of the national market and the objectivity of the state economic policy.

The fundamentals of antimonopoly policy are enshrined in federal law“On Competition and Limitation of Monopolistic Activity in Commodity Markets”, adopted in 1991. The relatively established system of antimonopoly regulation was reformed after the 1998 crisis, when its shortcomings became apparent. As part of it, in 1999, the Federal Law "On Competition and Restriction of Monopolistic Activity in Commodity Markets", and the State Committee for Antimonopoly Policy and Support for New economic structures was transformed into the Ministry of the Russian Federation for Antimonopoly Policy and Entrepreneurship Support. Since that time, active regulation of competition in various areas of the national economy has begun (for example, the Federal Law “On Protection of Competition in the Financial Services Market”).

Due to the low efficiency and inconsistency of state regulation of the activities of natural monopolies, the Ministry of the Russian Federation for Antimonopoly Policy and Entrepreneurship Support was forced to resolve many cases of violation of competition in court, for example, JSC Irkutskenergo, RAO UES of Russia.

Since 2004, a fundamental change in the state antimonopoly policy has taken place, when, simultaneously with the general reform of the state apparatus, the RF Ministry for Antimonopoly Policy and Entrepreneurship Support was reorganized into the Federal Antimonopoly Service. The main activity of the new structure was determined to create conditions for the development of competition and the development of a unified state policy to support competition. Despite this, in general, the state antimonopoly policy has retained its inactive nature - there is simply a fixation of cases of violation of competition.

There is a transition of the problem of competition from a purely economic category to a political one, which indicates the need to maintain it at the proper level throughout society. The activity of monopolists, which is certainly necessary in some industries, should be more and more legally regulated primarily in the interests of the consumer.

Competition is an economic process aimed at the interaction, interconnection and struggle between enterprises operating in the market in order to ensure all sales opportunities. own products and also meet the needs of consumers.

Competition features

In the specialized literature, the following functions are distinguished that competition performs:

• establishing or revealing the market value of any product;
• equalization of cost with the distribution of profits, depending on the labor costs for production;
• regulation of the distribution of financial resources between industries and industries.

There are various classifications of this economic indicator. For example, perfect and imperfect competition. Let us dwell in this article in more detail on some types in more detail.

Varieties of competition by scale of development

Within this classification, the following types should be distinguished:

• individual, in which one participant seeks to take a certain place in the market to select the best conditions for the sale of services and goods;
• local, determined among sellers in one territory;
• sectoral (within one industry there is a struggle for maximum income);
• intersectoral, expressed in the rivalry of sellers of various industries in the market for additional attraction of buyers to obtain a large income;
• national, represented by the competition of commodity owners within one state;
• global, defined as the struggle of business entities and various countries within the global market.

Types of competition in the context of the nature of development

The economic indicator according to the nature of development is divided into regulated and free. Also in the economic literature, you can find the following types of competition: price and non-price.

Thus, price competition can arise by artificially lowering prices for specific products. At the same time, price discrimination is widely used, which occurs when the specified product is sold at different prices that are not justified in terms of costs.

This type of competition is most often used in the transportation of goods or products (often it is the transportation of non-durable goods from one outlet to another), as well as in the service sector.

Non-price competition manifests itself mainly due to the improvement of product quality, production technologies, nanotechnologies and innovations, as well as patenting the conditions for the sale of finished products. This type of competition is based on the desire to capture a part of the market of a certain industry through the release of completely new products that are fundamentally different from analogues or by upgrading the old model.

Characteristics of perfect and imperfect competition

This classification takes place depending on the competitive equilibrium in the market. Thus, perfect competition is based on the fulfillment of any equilibrium prerequisites. These may include: many independent consumers and producers, free trade production factors, independence of economic entities, comparability and homogeneity of finished products, as well as the availability of available information on the state of the market.

Imperfect competition is based on the violation of any prerequisites for equilibrium. This competition is characterized by the following properties: the distribution of the market between large enterprises with the limitation of their independence, differentiation of finished products and control of market segments.

Advantages and disadvantages of competition

Perfect and imperfect competition have their advantages and disadvantages.

So, based on the definition of perfect competition, which shows the state of the market, where there are producers and consumers that do not affect the market price, which means that there is no reduction in demand for products with an increase in sales volumes, the advantages include:

• facilitating the achievement of compliance with the interests of market participants by using a balanced supply and demand, achieving an equilibrium price and volume;
• ensuring efficient allocation of limited resources in accordance with the information on the pledged price;
• orientation of the manufacturer to the buyer - to achieve the main goal to meet some of the economic needs of the citizen.

Thus, perfect and imperfect competition contribute to the achievement of an optimal and competitive state of the market, in which there is no profit or loss.

With these advantages, there are some disadvantages of these types of competition:

• the presence of equality of opportunity while maintaining inequality of outcome;
• benefits that are not subject to division and individual evaluation in a competitive environment are not produced;
• lack of consideration for the different tastes of consumers.

Perfect and imperfect competition provide insight into how the market mechanism works, but are actually quite rare. The second type of competition determines the influence of producers and consumers on the price and its changes. At the same time, the volume of finished products and access of manufacturers to this market has some limitations.

There are the following conditions in which there are some types of competition (perfect and imperfect):

• in a functioning market, only a limited number of producers should operate;
• take place economic conditions in the form of barriers, natural monopolies, taxes and licenses to enter a particular industry;
• The market of perfect and imperfect competition in information is characterized by some distortions and is biased.

These factors can contribute to the disruption of any market equilibrium due to the limited number of producers, which sets and subsequently maintains fairly high prices in order to obtain high monopolistic profits. In practice, you can meet the following types of competition (perfect and imperfect including): oligopoly, monopoly and monopolistic competition.

Classification of competition according to the demand and supply of goods or services

Within the framework of this classification, perfect and imperfect market competition take the following forms: oligopolistic, pure and monopolistic.

Considering the above in more detail, it can be noted that oligopolistic competition, in general, can refer to an imperfect form. As key features functioning market are accepted: a small number of competitors who have a fairly strong relationship; significant market power (the so-called reactive position and measured by the elasticity of the enterprise's response to some behavior of competitors); limited number with the similarity of goods.

The conditions of perfect and imperfect competition are manifested for such industries as: the chemical industry (production of rubber, polyethylene, technical oils and certain types of resins), machine-building and metalworking industries.

Pure competition is a kind that can be classified as perfect competition. The key characteristics of this market are as follows: a significant number of both sellers and buyers without sufficient power to influence prices; undifferentiated (interchangeable) goods sold at prices that are determined by comparing supply and demand, as well as the absence of a kind of market power.

Market structures (perfect and imperfect competition) are widely used in industries that produce consumer goods: food and light industry, as well as the manufacture of household appliances.

There is another type of competition - monopolistic. Its main characteristics include: a large number of competitors with a balance of their forces; the differentiation of goods, expressed by the buyer's consideration of goods in terms of their possession of distinctive features perceived by the market.

Types market competition(perfect and imperfect) with the help of differentiation they convey the following forms: special technical specification, the taste of the drink, a combination of different characteristics. We should not forget about the increase in market power due to the differentiation of goods, which will protect the business entity and make a profit above the average market.

Market classification

The model of perfect and imperfect competition assumes the existence of competitive and non-competitive markets. As criteria for the difference between these markets, it is customary to consider the main features that are characteristic to some extent of the models:

• the number of enterprises in a particular industry with their size;
• production of goods: of the same type (standardized) or heterogeneous (differentiated);
• ease of entry into a particular industry or the exit of an enterprise from it;
• availability of market information to companies.

The market of perfect and imperfect competition has the following features:

• the presence of a certain number of buyers and sellers for a particular type of product, while each of them can produce (buy) only a small share of the total market volume;
• homogeneity of goods from the point of view of buyers;
• the absence of entry barriers for entry into the industry of a newly formed manufacturer, as well as free exit from it;
• availability of complete information for all market participants (for example, buyers are aware of prices);
• rationality in the behavior of market participants who pursue personal interests.

A firm under perfect and imperfect competition

The behavior of an enterprise depends not so much on time as on the type of competition. Considering the rational behavior of the company in conditions of perfect competition, it is necessary to note the following. The goal of any business entity is to maximize profits obtained by increasing the gap between price and costs. In this case, the price should be set under the influence of supply and demand in the market. If the company significantly increases the price of its own finished products, it may lose buyers who purchase similar products from a competitor. And the sales of the specified economic entity may decrease significantly. As for the costs, in this case their value is determined by the technologies used by the enterprise.

Thus, any business entity faces the question of determining the quantity of produced and sold products in order to obtain maximum profit. Therefore, the company has to constantly compare the market price of products and the marginal cost of its manufacture.

An enterprise in conditions of imperfect competition

To achieve the rationality of the enterprise's behavior in the presence of imperfect competition in the market, the following conditions must be met.

In contrast to the above example, under conditions of imperfect competition, the manufacturer can already influence the price of his own products. If, in the conditions of functioning in the market of perfect competition, the income from the sale of products does not contain any changes (equals to the market price), then in the presence of imperfect competition, sales growth can reduce the price, which leads to a decrease in additional income.

In addition to maximizing profits, there are other types of motivation for the activities of the enterprise:

• simultaneously consider and increase sales;
• achievement by the enterprise of a certain level of profit, and then it is already possible not to make any efforts to maximize it.

Conclusion

Summing up the material presented in this article, it is necessary to note the following. The development of competition between manufacturers leads to the separation of large stable companies, with which it is already difficult for other manufacturers to “compete”. Before each newly created manufacturer who wants to take a certain place in a particular industry or market, there may be quite complex barriers. In this case, we are talking about the availability of the necessary financial resources. There are also some administrative barriers that provide for rather stringent requirements for "newcomers" to the market.