Monopoly is a form of market (market structure) in which one or more firms are suppliers of a product that does not have close substitutes, and as such occupy a dominant position in the market, which allows them to determine prices or significantly influence them.

Being the opposite of competition, monopoly means the exclusive right of production, fishing, trade and other types of economic activity owned by one person, group of persons or the state. Has long been known natural monopoly . An industry in which a single firm operates more efficiently than competitors. There are many examples of natural monopoly: local provision of electricity and gas. In such an industry, the minimum efficient scale of production of a good is close to the quantity for which the market demands at any price sufficient to cover production costs.

In all other cases, monopolies are artificial, i.e. there are subjective reasons for their formation. It has become characteristic of modern economic life artificial monopoly .

Natural, or pure, monopoly? a market model in which one firm is the only producer of a product that has no substitutes. Known for her character traits:

1. A single seller, i.e., an industry, consists of one firm. Are there “company” and “industry” here? synonyms. One company is the only manufacturer of a given product or the only provider of a service.

2. There are no substitutes for this product. Product monopolies 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 acceptable alternatives. The buyer must purchase the product from monopolist or do without it. To such monopolies include state-regulated public utilities or so-called natural monopolies(electric and gas companies, cable television, water supply and communications companies, etc.). There are also no substitutes for the services provided by public utilities. But if they exist, they are either expensive or inconvenient.

Clean monopoly may also have a geographical dimension.

A small city is sometimes served by only one airline or railway. A local bank, movie theater, or bookstore may be considered clean monopolies in a small town.

3. The company dictates the price. An individual firm operating under conditions of pure competition has no influence on the price of a product: it “agrees with the price.” Clean monopolist exercises significant control over price. And the reason is obvious: it issues and therefore controls the total supply.

4. Entry into the industry is blocked in the form of: a) economies of scale; b) lack of substitutes; c) ownership of patents and scientific research. These barriers help explain the existence of pure monopolies and other non-competitive market structures. Barriers to entry into the industry, which are very significant in the short term, turn out to be surmountable in the long term.

Thus, natural monopoly (monopoly in the narrow sense)? This monopoly on rare and irreproducible factors of production (land, gas, oil, rare metals, etc.

). Natural monopolist produces a unique product? there is no substitute for it. For example, gas heating at home. No gas? and there is no heat. And it turns out: being the only gas producer, monopolist occupies a dominant position in the market. Will he commit arbitrariness? “increase” prices to incredible levels or change the gas supply regime at your discretion? Maybe he would like it that way, but it is not so. And all because the majority natural monopolists are created by the government. The government can issue a patent for a unique product, a copyright for something, or a license to do business in a certain market without competition. In addition, municipalities license power plant companies, gas companies, and communications companies to prevent duplication of capacity. These companies are very strictly controlled in their activities and pricing

The reasons for the emergence and development of monopolies are related to the action of objective economic laws, the development of productive forces and significant changes in the technological method of production.

Firstly, operation of the law of competition. The law of competition and each of its functions are subordinated to achieving the main goal of production - profit maximization. To maximize profits, the manufacturer must constantly increase production and sales of goods, gradually eliminating its competitors. In the end, the manufacturer, capturing and controlling most of the production and sale of goods, turns into a monopolist. This means that competition gives rise to its antipode - monopoly. Competition and monopoly always exist in a real market economy as two opposing and interdependent characteristics of it.

Secondly, the reason for the emergence of a monopoly is the action law of concentration of capital and production.

Concentration of capital is the process of increasing the size of individual capital through the capitalization of profits, i.e., using a certain part of it to expand production.

Thirdly, the reason creating a monopoly is process of centralization of capital.

Centralization of capital - this is an increase in the size of capital due to the absorption or combination of several, previously independent, individual capitals into one larger one.

Fourthly, the reason for the emergence of monopolies was the transformation of individual private property.

Fifthly, the economic crises of the second half of the 19th century. became a factor in accelerating the concentration and centralization of production and the creation of monopolies on this basis.

The consequence of economic crises is the massive ruin and bankruptcy of small and medium-sized enterprises. Some of them are forcibly absorbed by big capital, while others are forced to agree to unification in order to avoid ruin. The relationship between these two phenomena - crises and monopolies - shows one of the reasons for the accelerated monopolization of the economy.

Natural monopoly arise as a result of objective reasons.
First, it may appear when the entire volume of a particular product or service is the product of one or more firms. Competition in this case is neither possible nor desirable (say, in energy supply, metro).
Secondly, this form of monopoly occurs in agriculture and extractive industries.

Administrative monopoly arise as a result of the actions of government bodies that grant individual firms exclusive rights to perform a certain type of activity.

Economic monopoly which is the most common, grows on the basis of the laws of economic development. The first path that leads to it is through the concentration of production, and the second is based on the centralization of capital.

Scientific works and textbooks define such basic forms of monopolies as cartels, syndicates, trusts and concerns.

Cartel - this is an association of several enterprises of the same industry, which does not eliminate their production or commercial independence, but provides for an agreement between them on certain issues: the distribution of sales markets, price levels, production quotas, and the like.

Syndicate - an association of enterprises from the same industry that create a common herd sales office. Thus, while retaining production independence, syndicate members lose commercial independence.

There are many different terms in economic theory. However, the most capacious of them is. How correct the use of this term is and what its semantic meaning is in a particular case depends directly on the context. This is due to different interpretations of this concept.

Essence of the term

The word "monopoly" is translated from Greek as "mono" - one and "polio" - I sell. This term means a situation in the market when only one company operates on it. At the same time, there is completely no competition or no one else produces similar goods or services.

The first monopolies in human history were created thanks to state sanctions. The government adopted laws giving a privileged right to any company to trade in one or another product. 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 activity on it. In this case, the monopolist, in the absence of competition, determines the cost of its goods itself or very significantly influences the pricing policy. This definition of the term is a qualitative characteristic of the market.

Main features of monopoly

Experts identify the following situations that indicate the presence of a single business firm:

• the presence of one or a very large seller;
• availability of products that have no competitive analogues;
• the existence of high threshold criteria for the entry of new enterprises into a similar market segment.

There are other interpretations applied to the term “monopoly”. For example, this concept may mean a separate company, which is characterized by priority in managing a certain market segment.

Options for interpretation

The term "monopoly" is understood as:

• the state of either the market or one of its segments, in which there is only one player;
• the only company that produces and sells the goods it creates;
• a market with a single leading enterprise present in it.

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

Classification

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

• natural monopoly, when an economic entity occupies a privileged position in the market;
• pure monopoly, when there is a single supplier of a certain product;
• a conglomerate is several entities of a heterogeneous type, but mutually financially integrated (an example in Russia is Gazmetall CJSC);
• a closed monopoly that has protection from competition in the form of legal restrictions, patents and copyrights;
• an open monopoly, which is characterized by the fact that there is a single supplier of a product on the market that does not have special protection from competition.

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

Natural monopoly

Often a situation arises in the market when the demand for a particular product is satisfied by one or more companies. In this case, a natural monopoly arises. Its reasons lie in the peculiarities of customer service and the technological process.

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

Natural monopolies also work in the following areas:

• transportation of petroleum products, gas and oil through main pipelines;
• services to provide the population with publicly accessible postal and electrical communications.

Let's take, for example, the electric power industry. There is also a natural monopoly here. Examples in Russia are 700 existing thermal power plants, state district power plants and hydroelectric power stations, which were merged into RAO UES Russia. The company was formed in 1992, when fifty of the newest power plants were removed from the territorially subordinate JSC-Energos. Today, RAO UES Russia owns the entire network of power transmission lines in the country.

The natural monopoly also affected the gas industry. Examples in Russia are eight associations for its transportation, as well as thirteen regional transport enterprises for its transportation, united in RAO Gazprom. This company accounts for a quarter of all state budget revenues.

OJSC Gazprom carries out 56% of supplies to 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 railway industry is a natural monopolist in Russia. The share of the track facilities of JSC Russian Railways, as well as freight turnover, is 80% of all transportation 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 natural world are somewhat different from those in Russia. Legislative acts of Western countries use terms such as:

• public service;
• a service needed by all;
• network service, etc.

Thus, in the UK there is no legal definition of the term “natural monopolies”. Examples of societies that are “necessary for all” concern railway structures, electricity transmission and distribution, water supply and sanitation. And in France, the term “natural monopolies” is enshrined in the concept of “commercial and industrial public services”. These are organizations operating in the field of communications, railway transportation and electricity supply.

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

Artificial monopoly

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

How does an artificial monopoly arise? Examples of the emergence of dominant enterprises indicate the likelihood of two ways to achieve the goal. The first of them 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 merger or takeover of bankrupt organizations. At the same time, a lot of small and medium-sized enterprises are turning into larger ones. An artificial monopoly arises. It covers a certain segment of the market and has no competitors.

Artificial monopolies are currently widespread. Examples of such associations are concerns, trusts, syndicates and cartels. Every entrepreneur strives to achieve a monopolistic position. It allows you to eliminate a number of risks and problems associated with competitors, as well as take a privileged position in the market. At the same time, the monopolist is able to influence other market participants and impose its conditions on them.

The creation of an artificial monopoly can occur in another way. The state, through its legislative acts, is able to grant the right to produce products or provide services to only one enterprise. This also creates artificial monopolies. There are examples of this in most countries of the world. These are organizations based on government preferences. An example in Russia is the Mosgortrans company. It provides the capital with ground transport. At the same time, the government does not give permission to other carriers and its competitors to operate on the market.

State monopoly

Its creation is carried out with the help of legislative barriers. Legal documents define the commodity boundaries of the monopoly entity and the forms of control over it. At the same time, some companies are granted the exclusive right to carry out one or another type of activity. These organizations are government-owned. They are subordinate to headquarters, ministries, etc. A state monopoly groups enterprises in the same industry. This leads to a lack of competition in the sales market.

They exist in Russia. Examples of activities regulated by legislation are given below. These include:

• activities related to the trafficking of psychotropic and narcotic drugs;
• work in the field of military-technical regulation;
• issue of cash and organization of its circulation on the territory of Russia;
• branding and testing of products made of precious metals;
• production and circulation of ethyl alcohol;
• export and import of certain 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. It has a monopoly on the organization, circulation and issue of cash. This right is given to him by legislative acts.

There is also a state monopoly in the field of health care. Examples concern the production of drugs. Thus, the Federal State Unitary Enterprise “Moscow Endocrine Plant” has monopoly rights. It produces drugs that are used in various areas of healthcare. These are psychiatry and gynecology, endocrinology and ophthalmology.

There is also a state monopoly in the space industry. In Russia, examples relate to various objects in this field, the most striking of them is the Baikonur cosmodrome.

Pure monopoly

Sometimes a situation arises in the market when a new company appears in the consumer sector, offering a newly created product that has no analogues. This is a pure monopoly. Examples of such situations are currently few in number. Today this phenomenon is quite rare. More often than not, several firms compete with each other. Currently, as a rule, only with the support of the state can a pure monopoly exist. Examples can only be given for entities offering their products on local markets. The simplest of them is when a company dictates its price to consumers. However, the cost of services or goods of pure monopolies may be under state control. At the same time, such business entities will be protected from other sellers entering their sphere of activity by state legislative acts.

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

A striking example of a pure monopoly in Russia is local companies supplying electricity and gas to populated areas. In addition, these are the companies that maintain water networks. Utilities are the most successful examples of such business entities around the world.

Open monopoly

A situation may arise in the market when a company starts producing a completely new product. But unlike a pure monopoly, the state does not protect it from possible competitors. In this case, an open monopoly arises, which can be classified as one of the types of pure monopoly. For some period of time, the company is the only supplier of the new product. Competitors of such companies appear on the market somewhat later.

If we give examples of an open monopoly, it is worth remembering Apple, which was the first to offer touch technology to consumers.

Bilateral monopolies

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

Conclusion

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

However, often the position of a business entity changes radically. Thus, the existing advantages of natural monopolies are not their integral side. The market position of such business entities may change as competitors develop new technologies. The position of closed monopolies is also not sustainable. All benefits and privileges given to them can be canceled by newly introduced legislative acts.

In this section:

Pure monopoly and its characteristic features. Barriers to entry into the industry. Types of monopolies

Determination of price and production volume under conditions of pure monopoly. Price discrimination

Monopoly and economic efficiency

Pure monopoly and its characteristic features. Barriers to entry into the industry. Types of monopolies

The opposite of perfect competition is a pure monopoly - a market in which only one firm operates, and due to this circumstance is capable of influencing market equilibrium and market price. Monopoly- the most striking manifestation of imperfect competition. Monopoly is a market structure that meets the following conditions:

1. The production of goods by the entire industry is controlled by one seller of this product, i.e., a monopolist firm is the only producer of this good and represents the entire industry.

2. The product produced by the monopolist is special in its kind (unique) and has no close substitutes; in this regard, the demand for the monopolist’s product has a low degree of price elasticity, and the demand graph for it has a sharply “falling” character,

3. The monopoly is completely closed to the entry of new firms into the industry, therefore, under the conditions of a monopoly, there is no competition.

These conditions allow us to conclude that a monopolist firm has market power and is able to independently change the price of the goods sold within certain limits (in contrast to perfect competition, where each individual firm is only forced to “agree” with the price).

As an example of a pure monopoly, public utility and utility enterprises are usually considered - gas, electricity, water supply enterprises and some others. These companies are called natural monopolies. Natural monopoly- an industry in which an industry product can be produced by one company at lower costs than if it were produced by more than one company, i.e. when there was competition in the industry. The state usually grants natural monopolies exclusive privileges. At the same time, the government retains the right to regulate the actions of such enterprises, preventing abuse on their part. Large corporations that dominate the industry can also be classified as monopolies.

The emergence and existence of pure monopolies is usually explained by the presence of barriers to entry into the industry. The factors that contribute to the formation of such barriers give rise to monopoly power in the markets in question. All barriers can be divided into two groups - natural and artificially created.

Among natural barriers can be distinguished:

1. Economic- individual firms, through constant improvement of technological processes, can achieve the lowest production costs when producing a very significant volume of products (positive economies of scale). This results in only one or a few large firms being able to have low production costs per unit. The remaining firms are forced out of the industry, and a natural monopoly arises. Natural barriers also arise when the domestic market of a country is relatively small, and only large enterprises are economically effective in a given industry, so one company covers almost the entire industry.

2. Technological- are associated with the existence of local utility enterprises. The current level of technology and technology makes competition here very difficult or simply impossible. For example, it makes no sense to carry out competition to each house with several water pipes.

3. Financial- monopolized industries usually have a significant volume of output, so in order for a new company to enter the industry, it needs to make large investments, train qualified personnel, etc., which is associated with significant costs and blocks entry into the industry.

4. Ownership of certain types of resources. A firm that owns or controls the raw materials needed in the production of a given material good can prevent the emergence of competing firms in the market for that good, in which it usually acts as a monopolist.

TO artificially created barriers can be attributed:

1. Legal- guaranteeing patent rights to inventions, granting special privileges in the form of licenses for the production and sale of products, ensuring the secrecy of some individual developments on the part of the government can lead to the concentration in the hands of one company of the bulk of patents and licenses for goods produced in the industry.

2. Methods of unfair competition- such an organization of competition in which business entities resort to illegal methods of influencing competitors: dissemination of false information about a competitor; the use of a system of dumping prices, when, in order to ruin a competitor or force him out of the market for a short time, a price is set below the average cost; criminal and other methods.

For your information. Sometimes the source of monopoly power can be the collective behavior of consumers who show strong loyalty to a given brand and prefer the products of this particular company, which ultimately can give rise to the market power of a given manufacturer.

The barriers listed above that block entry into a monopolized market are determined by factors that ensure the market strength of the only manufacturer operating in a given industry. The multiplicity of these factors gives rise to the existence of several types of monopolies:

closed monopoly. Market power and monopoly position in the market are due to legal barriers that exclude competition in the industry. Since the emergence of a closed monopoly is associated with the activities of state institutions, the activities of such firms require close attention from the state and the presence of a number of restrictions regarding the price level and excess profits received;

open monopoly. In the case of an open monopoly, the market power of the monopolist firm is the result of the innovative achievements of the firm itself (a new product, a new technology that provides a pronounced competitive advantage that allows it to push competitors out of the market, etc.). Market advantages associated with innovation can be copied or surpassed, which explains the short-term existence of the sole market power of firms - open monopolies;

natural monopoly. It has already been discussed. The market power of such firms is determined by achieving the lowest costs per unit of output while satisfying the entire industry (market) demand for it;

monopsony- a special type of market structure, when market power is concentrated in the hands of the buyer rather than the seller;

bilateral monopoly occurs when the monopoly power of the seller collides with the monopoly power of the buyer.

The extreme opposite is pure monopoly.

Monopoly assumes that one enterprise is the only manufacturer of products that have no analogues. At the same time, buyers do not have the opportunity to choose: they are forced to purchase the products of a monopolist enterprise.

TO pure monopoly industries It is customary to classify the sectors of public utilities as: heat, water, gas, and electricity. Practice shows that a pure monopoly, as a rule, exists in theory. However, many in basic parameters are very close to the situation of a pure monopoly than to any other market model.

The most significant characteristics of the market structure of a pure monopoly include the following:

1. Sole manufacturer(seller) of a specific product or service. In a pure monopoly, the firm has no direct competitors and therefore coefficient of volumetric, or quantitative, cross elasticity of demand, which characterizes the interdependence of firms in the market, is close to zero. Let me remind you that this coefficient shows the degree of quantitative change in the price of firm X when the volume of output of firm Y changes by 1%.

The higher the volume crossover, the greater the interdependence between firms in the market. If it is equal or close to zero, then an individual producer (as is the case with a pure monopoly) can determine market prices himself and ignore the reaction of other firms to his actions.

2. There are no close substitute products. A product produced by a monopoly is unique in the sense that not only there are no firms producing a similar product, but there are also no firms creating close (from the consumer point of view) analogues. This means that the cross price elasticity of demand, which shows the degree of quantitative change in the sales volume of monopolist firm i when the price of some other firm j changes by 1%, is also close to zero:

In a pure monopoly, a firm has a special market power, allowing it to regulate market prices for its products by changing sales volumes. At the same time, the company cannot set any prices, since it is limited by the solvency of consumers and the law of demand.

3. Lack of freedom to enter the market.

A monopoly can only exist in conditions where the penetration and activity of other firms in the market is practically impossible or economically ineffective.

Among the most important barriers Entry into the industry is distinguished by:

Natural monopoly- based on positive economies of scale of production, which are so significant that one firm can provide all market demand with products at lower costs than several openly competing firms.

Rice. 1 illustrates the situation on the natural monopoly market.

Rice. 1. Natural monopoly

For a given market demand curve, one firm can supply 10 units. with average costs equal to 5.u. (total vehicle costs = 50 USD). Obviously, the coexistence of two firms in the industry would increase total costs for the same volume to
TS=2(6*5)=60 USD

Examples of a natural monopoly include Gazprom and RAO UES. Even if it is technically possible for two or more firms to exist in these industries, it is not economically efficient. Natural monopolies typically receive the right from the government to serve a specific market or geographic area, and in return agree to be subject to government control and regulation aimed at protecting consumer rights from abuse of monopoly (market) power. Only large diversified corporations can overcome such a barrier.

• Availability from the company patent on the product or on the technological process used in its manufacture. A patent gives an inventor or innovator the exclusive right to make and sell a product for a specified period of time. Examples of this type of monopoly include General Electric (Edisson's invention allowed the firm to dominate the industry from 1892 to 1930) or Xerox (which had approximately 75% of the copier market until the patent expired in the 1970s).
• Possession and supply control rare or strategically important raw materials (De Beers - 70% of the diamond market).
• Providing the company with government licenses be the exclusive manufacturer (seller) in a given geographic area.
• High transport costs, contributing to the formation of isolated local markets and the emergence of local monopolists within a single industry in a technological sense.
• Offering products that consumers prefer to all other companies (for example, Campbell canned soups - 85% of canned soup sales in the United States).

4. Perfect knowledge everyone All decisions are made under conditions of certainty. This means that the only seller (manufacturer) and all buyers know all the necessary market parameters: prices, physical characteristics of the product, income and cost functions. In this case, it is assumed (as in perfect competition) that information is distributed instantly and free of charge. The assumption of perfect information is very important for the monopolist. Under perfect competition, the firm is a price taker, the market price is an external (exogenous) factor, and the individual demand curve is determined by a straight line parallel to the output axis. Under these conditions, to maximize its profit, a firm only needs to know its cost function. For a monopolist, this information is not enough. He needs to know the demand curve for his products, as well as (when implementing a policy of price discrimination) the demand functions of individual consumers or market segments for his products.

Demand and income of a monopolist firm. Features of a monopolist's demand curve

Basics difference in behavior perfect competitor and pure monopolist due to nature of demand curves.

1. When perfect competition the company is price taker, i.e. it takes market prices as data. The demand curve for its products is perfectly elastic and looks like a straight line parallel to the volume axis.

Monopoly company, being the only manufacturer (seller) of his products, faces the aggregate demand of all consumers of his goods, and in this sense the monopolist's individual demand curve is identical to the market demand curve, i.e. It has negative slope.

2. The demand curve for the monopolist’s products, being at the same time average income (AR) curve. (The identity of the demand curve and the average income curve can be deduced from the ratio of total and average income.):

• AR=TR/Q=PQ/Q=P,
• AR(Q)=P(Q).

3. Due to the downward sloping nature of the demand curve - AR marginal revenue curve lies below the demand curve at any value Q>0.

Let's prove this statement.

Let the price depend on the quantity demanded (inverse function of demand), i.e. P=P(Q);

TR=P*Q=P(Q)*Q— total income by definition;

MR=d(TR)/dQ=d(PQ)/dQ— marginal income by definition.

We use the standard formula (uv)"=u"v+uv", and rewrite the marginal revenue equation:

Since under conditions of an imperfect monopoly, the extreme case of which is a pure monopoly, the demand curve will be decreasing, then the derivative P"(Q)=

Economic sense This inequality lies in the fact that with a decreasing demand curve, a monopolist can sell an additional unit of a product only by reducing its price. The change in his total income (in other words, his marginal revenue) with an increase in sales from Q=n to Q=n+1 will equal to the new, reduced price minus the loss in income from the sale of all additional n units of the product:

MRn+1=Pn+1 — (Pn — Pn+1)Qn,

Where MRn+1- income from sales n+1 units of goods;

Pn, Pn+1- sales prices n And n+1 units of goods;

Qn- sales volume in the amount n units.

Because the Рn- Pn+1>0(price decreases as sales volume increases),

Marginal revenue and demand (the case of a linear demand function)

Suppose that the monopolist's demand curve is not only downward sloping, but also linear, as shown in Fig. 2.

Rice. 2. Linear demand function of a monopolist firm

Then the demand function (inverse) can be written in general form as the equation

Р=a-bQ,

where a, b are positive constants.

Accordingly, the total income function has the form

TR=PQ=(a-bQ)Q=aQ-bQ2.

Since marginal revenue is always equal to the first derivative of total revenue, the equation for the MR function is

МR=dTR/dQ=a-2bQ.

Both functions start at price P=a, but the slope of the MR curve (-2b) is twice the slope of the demand function curve (-b). Geometrically, the monopolist's MR curve divides the horizontal distance between the monopolist's demand curve and the vertical axis into two equal parts, in other words, segment AB = segment BC.

Conditions for maximizing the profit of a monopolist firm

Let us assume that the cost structure of a monopolist firm is given by the ATC and MC and TC curves, and the marginal revenue is determined by the demand curve. What will be the optimal price and volume levels for the monopolist?

In conditions of perfect competition, the current price is set by the market, and the firm cannot influence it, being a price taker. To maximize profits (or minimize their losses if making a profit is impossible), the company must determine the optimal output volume under given market and technological conditions. In a pure monopoly, a firm can maximize profits by choosing either volume or price.

Two approaches to determining maximization conditions

There are two interrelated approaches already known to us to determine the conditions for maximizing profit.

1. Total cost - total income method.

The firm's total profit is maximized at the level of output where the difference between TR and TC is as large as possible:

Rice. 3. Determination of the maximum profit level

In Fig. 3 shows that the monopolist will receive economic profit at any point on the segment AB, but the maximum profit can be obtained only at the point where the tangent to the TC curve has the same slope as the TR curve. The profit function is found by subtracting TC from TR for each volume of production. Peak crooked total profit(p) shows optimal production volume, i.e. volume that maximizes profits in the short run.

The necessary condition for profit maximization can be written as follows: Total profit reaches its maximum at the level of production at which marginal profit is zero.

Marginal profit (Mp) is the increase in total profit when the volume of output changes by one unit. Geometrically, marginal profit is equal to the slope of the total profit function and is calculated using the formula

Мп=(п)"=dп/dQ.

If MP>0, then the total profit function increases, and additional production can increase total profit. If MP<0, то функция совокупной прибыли уменьшается, и дополнительный выпуск сократит совокупную прибыль. И только при Мп=0 значение совокупной прибыли максимально.

The second method follows from the necessary maximization condition (Mn=0).

2. Marginal cost-marginal revenue method.

Мп=(п)"=dп/dQ,

(n)"=dTR/dQ-dTC/dQ.

And since dTR/dQ=MR, A dTC/dQ=MS, then total profit reaches its greatest value at such a volume of output at which marginal costs are equal to marginal revenue:

MS=MR.

If marginal cost is greater than marginal revenue ( MC>MR), then the monopolist can increase profits by reducing production volume. If marginal cost is less than marginal revenue ( MC<МR ), then profit can be increased by expanding production, and only if MS=MR at the point Q* equilibrium is achieved, as shown in Fig. 4.

Rice. 4. Condition of economic equilibrium

The equality MC=MR is a condition for maximizing, and not a condition for minimizing profit, only if the second-order condition is satisfied:

p""(Q)=TR""(Q)-TC""(Q)<0

or because MR(Q)=TR"(Q), and MC(Q)=TC"(Q),

That MR"(Q)-MC"(Q)<0 .

Graphically, this means that the marginal revenue curve intersects the marginal cost curve from top to bottom (Fig. 4). Otherwise equality MR=MC will minimize profit (Fig. 5).

Rice. 5. Profit minimization condition

Example 1. Finding the optimal production volume of a monopolist firm.

It is known that the demand function of a monopolist has the form Р=5000-17Q, total cost function TC=75000+200Q-17Q2+Q3.

Define:

• the volume of production that provides the company with maximum profit;
• optimal market price;
• the amount of total profit;

The condition for maximizing profit is the equality MC=MR. Let's find MC and MR from these equations:

1. TR=PQ=(5000-17Q)Q=5000Q-17Q2;

MR=(TR)"=dTR/dQ=5000-34Q;

2. MC=(TC)"=200-34Q+3Q2;

3. MC=MR;

200-34 Q+3 Q2=5000-34 Q;

3 Q2=4800;

Q=-40 Q=40 .

Since a negative value has no economic meaning, the optimal production volume is Q*=40.

The optimal market price is found by substituting Q* into the demand function.

4. P=5000-17Q;

P=5000-17(40)=4320 rub.

The total profit can be found as the difference between TC and TR at Q*=40.

5. p=TR-TC=52000 RUR.

Difference between the conditions for maximizing profit under perfect competition and under monopoly

The main difference between the conditions for maximizing profit under perfect competition and under monopoly is as follows.

For a perfectly competitive MR=P, and for a monopolist MR. Therefore, the equation MC=MR cannot be reduced to the form MC=P as in perfect competition.

Graphically, this means that with perfect competition the optimum point is determined by the intersection of MC and P, and with monopoly - by the intersection of MC and MR.

Optimum point and profit of the monopolist

The ability of a monopoly firm to influence prices is not unlimited. Highest price, which the monopolist can assign, is determined demand curve. It follows from this that the market power of a monopolist firm does not guarantee receipt positive economic profit.

To determine total profit, a firm compares average total costs (ATC) and the price (P*) at which it can sell the optimal volume of output Q* (based on the market demand curve).

p=(P*-ATS)Q*.

If the demand for your product sharply decreases (from D to D", as shown in Fig. 6 b), then the profit may be zero (especially for local monopolists operating within a small town or region).

Rice. 6. Positive and zero economic profit

However, the conditions for closing production under perfect competition and under monopoly differ from each other. If the closure point of a perfectly competitive enterprise is the min AVC point (minimum average variable costs), then for a monopolist enterprise such a single closure point does not exist at all. The monopolist will stop production only under the condition of such a significant reduction in demand that the price will be below average variable costs at optimal output, i.e. If

In any other situation, the monopoly remains in the market, even if it cannot cover its short-term fixed costs.

Elasticity of demand and the monopolist's optimum point

There is a close relationship between marginal revenue, price, and the elasticity of demand for a firm's product, which can be represented as an equation. In order to write down the formula for this equation, we use the equations of total income (TR) and the point coefficient of price elasticity of demand (Ed).

MR=d(TR)/dQ=d(PQ)/dQ.

Because the P=f(Q), then we can write:

MR=d(PQ)/dQ=P(dQ/dQ)+Q(dP/dQ),

MR=P+Q(dP/dQ).

The coefficient of price elasticity of demand is calculated using the formula:

can be written:

(dQ/dP)=Ed:(P/Q),

dQ/dP=(EdQ)/P,

dP/dQ=P/(EdQ).

Let's substitute the resulting expression into the marginal revenue equation:

MR=P+Q(dP/dQ),

MR=P+Q(P/(EdQ)),

MR=P+P/Ed,

MR=P(1+1/Ed),

Where Ed— coefficient of price elasticity of demand for the products of a monopolist firm (Ed<0 в силу убывающего характера кривой спроса).

An important point follows from this equation: a monopolist firm always chooses a volume of production at which demand is price elastic.

If demand is inelastic. those. 0<|Ed|<1 (Ed<0) , then the marginal income M.R.<0 (Fig. 7) and lies below the volume axis. At the same time, marginal costs are always positive, i.e. MS>0, and, therefore, the profit maximization condition (MC=MR) is not satisfied.

Rice. 7. Elastic and non-elastic demand areas

The monopolist's profit can be maximum only with elastic demand, when |Ed|

This point is important to keep in mind when choosing from several combinations of prices and volumes that provide the same total income to the company. For example, selling 500 units. 20 rub. or 200 units. 50 rubles each? In both cases, the total income is 10,000 rubles. If we assume that the demand curve is linear, then most likely the firm will sell no more than 350 units. Let's look at this example.

Example 2. Selecting the optimal sales volume.

We know that when P1=20, Q1=500, when P2=50, Q2=200. Determine the optimal sales volume of the company.

The demand function in general can be written as P=a-bQ. Let's find the values ​​of the coefficients a, b using simple transformations.

20= a-500 b,

a=20+500 b.

Let's substitute the value of a into the equation 50=a-200b and solve it for b.

50=(20+500 b)-200 b,

300 b=30 ,

b=0.1 .

Knowing b, we'll find A.

a=20+500 b,

A=20+500(0,1)=70 .

Thus, the demand function has the form P=70-0.1Q.

The monopolist's profit reaches its maximum at MR=0.

TR= PQ=70 Q-0,1 Q2 ,

M.R.=(TR)"=70-0,2 Q=0 ,

Q=350 .

Elasticity of demand and pricing under imperfect competition

In practice, firm managers usually have limited information about the functions of market AR and marginal revenue, which makes it difficult to select an equilibrium point. We use the ratios of marginal income and elasticity coefficient ( MR=P(1+1/Ed)), as well as the profit maximization condition ( MC=MR) to find a universal pricing rule.

Let us be given:

MR=P(1+1/Ed)— the firm’s marginal revenue depends on the price and the coefficient of price elasticity of demand for the firm’s products.

MC=MR- a condition for maximizing profit.

Hence:

P(1+1/Ed)=MC,

P+P/Ed=MC,

P-MC=-P/Ed,

(P-MC)/P=-1/Ed.

Pindyck and Rubinfeld call this formula the “thumb” rule for pricing (by analogy with the “thumb” rule in physics, in Russian-language textbooks - the “right hand” rule). Left side of the equation (P-MC)/P indicates the extent to which a firm influences market prices, or the firm's monopoly power, and is determined by the relative excess of the firm's market price over its marginal cost.

In the topic “Perfect Competition” we already mentioned that this method of assessing the monopoly power of a firm was first proposed in 1934 by the economist
Abba Lerner and was called the “Lerner indicator of monopoly power”. The quantitative value of the Lerner coefficient ranges from 0 to 1. The higher the result obtained, the more the company can influence the market price and thereby receive additional profit.

The equation shows that this excess is equal to the reciprocal of the demand elasticity coefficient, taken with a minus sign. Let's rewrite the equation, expressing the price in terms of marginal costs:

Example 3. Finding the optimal price.

Elasticity of demand for the products of a monopolist firm Ed=-2. The total cost function is given by the equation TS=75+3Q2. Find the price that provides the company with maximum profit given the volume of production Q=10.

Let us find the value of marginal costs for a given volume.

MS=(TS)"=6Q=6(10)=60.

Let's substitute the resulting value MS and coefficient E into a universal pricing formula:

Р=60:(1-1/2)=120 rub..

Thus, the optimal price that provides the company with maximum profit is 120 rubles.

Common Misconceptions About Monopoly Pricing

Analysis of the conditions for maximizing profit by a monopolist, presented in Fig. 5.5 and 5.6, allows us to reveal several of the most common misconceptions regarding the behavior of a monopolist in the market:

• The monopolist does not charge the highest possible price.. The monopoly power of the company is limited by market demand; setting a price above P* will entail a decrease in the total profit of the monopoly.
• The monopolist's demand curve is not inelastic. Typically, most demand curves are elastic at the top end and inelastic at the bottom. A linear demand curve is half elastic and half inelastic (Ed=1 at MR=0). The monopolist's optimum point always lies in the elastic range of the demand curve.
• Monopolist profits are not always extremely high. Market demand may be so weak that the monopolist will earn only normal profits. In addition, production inefficiencies and high costs can significantly reduce a firm's profitability.

Supply and costs of a monopolist firm

In competitive market analysis, we have found that an individual firm's supply curve coincides with the increasing portion of the marginal cost curve above the minimum short-run average variable cost (SAVC). The function of supply on price is traditionally defined as the dependence of the volume of supply of a product or service on price, all other things being equal (i.e., for a given technology, for given prices for resources, etc.). In a monopolistic market there is no such dependence, since the quantity of products that a monopolist is ready to offer to the market depends not on price, but on changes in demand.

Depending on the nature of changes in demand, three supply models are possible.

In Fig. Figure 8 shows possible changes in price and supply depending on changes in the demand function.

Significant increase in demand from D1 before D2 causes an increase in the optimum point from Q1 before Q2 and an increase in the corresponding price from P1 before P2. The connection of these points, as it may seem at first glance, determines the supply curve S1, having traditional rising character.

However, let's see how the monopolist's output will change if another change in the demand function occurs. Let the demand curve shift to the right to a lesser extent and take the position D3. As can be seen from Fig. 5.9, the optimum point will not change, since MR3 crosses M.C. at the same point as MR2, but the price will be slightly lower ( P3<Р2 ). If we now connect the resulting points, then the new supply curve S3 will already be decreasing.

Rice. 8. Increasing nature of the supply curve

Rice. 9. Declining nature of the supply curve

Thus, from Fig. Figure 9 shows that the shape of the supply curves we obtain depends on how market demand changes. However, from the analysis of market supply and demand, we know that supply curves are independent of the demand function(s).

That is why supply curve model as a one-to-one correspondence between prices and volumes production, is used only in the theory of perfect competition. For other market structures (monopoly, oligopoly, monopolistic competition), the supply curve in this understanding does not exist. To analyze the behavior of imperfect competitors, including monopolists, the decisive factor is not the ratio of supply and demand, but the ratio of demand and costs. The intersection of supply and demand curves, the famous Marshall cross, determines equilibrium prices and equilibrium output only in a hypothetical perfectly competitive market.

Monopoly and perfect competition: main differences. Consequences of market monopolization

Analysis of market conditions under pure monopoly and perfect competition reveals the following differences between these market structures:

1. With a pure monopoly market price is usually higher and production volume is lower than under perfect competition. As can be seen in Fig. 10, with perfect competition, the optimum point (K) of a typical firm is determined by the intersection of supply and demand (coinciding with MC above min SAVC).

Rice. 10. Equilibrium conditions: pure monopoly and perfect competition

At pure monopoly the optimal volume of production (Qm) is obtained as a result of a comparison of marginal costs and marginal revenue (lying below the demand curve), and the price (Pm) is obtained as a result of the relationship optimal volume and demand curve. Based on our model, we can conclude that monopolization of a perfectly competitive industry (while keeping market demand and cost structure unchanged) will inevitably reduce total output and increase market prices. This results in both direct damage from underproduction of a good or service, and indirect damage from the redistribution of part of the consumer surplus in favor of a monopoly due to an increase in market price.

2. In a monopoly market resource efficiency is usually lower than under perfect competition. Since a monopolist firm is interested in reducing the total volume of output, some of the resources are unclaimed.

3. The monopolist has special market power, which allows him to dictate prices and production volumes.

The word "monopoly" comes from two words in Greek. One of them is monos, which means “one,” and the second is poleo, which means “I sell.”

The concept of pure or absolute monopoly is considered in economics. In this discipline, this term refers to a market in which only one company offers a certain product, and due to the lack of substitutes for the product it sells, it directly influences its price.

In the real economic conditions of any country, it is impossible to find a pure monopoly. However, this concept, in one or another combination, occurs in all market models. The same can be said about pure competition. It is also typical of market models. Economists identify four main types of them. Among them are pure monopoly and pure competition, oligopoly and monopolistic competition. Let's look at them in more detail. Let's look at pure monopoly first. We will also pay attention to its connection with other types of market structures.

Knowledge that there is a market of pure competition, pure monopoly, monopolistic competition and oligopoly will allow entrepreneurs to correctly build their economic policy, successfully adapting to a specific situation. Indeed, depending on the market model, the same actions can lead to different results.

Main features of a pure monopoly

This concept is the most striking manifestation of an imperfect type of competition. Moreover, this term refers not only to the market, but also to the company that is the only one in the industry. The features of a pure monopoly appear under conditions that are worth considering in more detail. Among them:

1. The presence of only one manufacturer or seller on the market. In this case, the terms “industry” and “firm” are synonymous. The fact is that the entire volume of product offered by a certain sector of the economy is produced by only one company. Pure monopoly sometimes has a geographical dimension. Thus, in a small locality there may be only one company operating that provides the population with one or another service, for example, a notary office.
2. The goods produced by the enterprise have no analogues or substitutes similar in their characteristics. This forces the buyer to purchase the offered product from only one company or do without it altogether. Based on the previous example, a consumer who wants to have documents notarized will need to travel to another city. However, this option is unacceptable for him, as it will require large costs.
3. The price is set by the monopolist company at its own discretion due to complete control of the entire volume of goods available on the market. In this respect, a pure monopoly is fundamentally different from a system of perfect competition. Here, a single company is not able to influence the cost of the product, assuming its already established level. Based on the fact that the demand for the product offered by the monopolist coincides with the demand in the industry, the firm has the opportunity to increase or decrease prices based only on changes in the quantity of the product.
4. There are barriers to new firms entering the industry. A monopolist is able to operate unchallenged in the market due to restrictions of a natural, technical, legal and economic nature. They do not provide the opportunity for other firms to enter the market in order to engage in the same type of production.
5. Examples of pure monopoly clearly indicate that the only enterprise in the market does not have to engage in advertising activities. After all, it is already known to consumers and is necessary for them.

Currently, economists count several types of pure monopoly. Let's look at some of them in more detail.

Natural monopoly

This term refers to a company that has a production model that, for certain reasons, is more efficient than that of other market players. Natural monopolists are, for example, companies that have access to a cheap source of electricity or raw materials. In this case, they will produce products or offer their services at low costs. The result of such activities will be a product that has a low cost, or the work will be carried out with great profit and dynamic development.

An example of a pure natural monopoly are enterprises that are part of the public utilities system, engaged in gas, water, electricity supply and some others. The state, as a rule, grants such firms the right to exclusive privileges. At the same time, the government constantly regulates the activities of such enterprises in order to prevent abuse on their part. Natural monopolies also include corporations that have a dominant position in the industry.

Enterprises of this type in the Russian Federation include Gazprom, Inter RAO, Rosatom, Russian Railways, as well as Russian Post.

It is worth noting that recently many countries have significantly reduced the scale and scope of state control of natural monopolies. This became possible due to the emergence of new approaches to regulation and the formation of appropriate markets.

Administrative monopoly

Such structures arise as a result of certain actions of various government bodies. They represent, on the one hand, the granting of individual firms the exclusive right to conduct a certain type of activity. From another point of view, such organizational structures are part of state enterprises, uniting with each other and subordinate to various departments, associations, ministries, etc. In such a monopoly, firms belonging to the same industry are grouped together. Together they act on the market as one economic entity. Thanks to this, there will be no competition between similar enterprises.

The most monopolized economy in the world was the economy of the former USSR. The dominant positions in the country were occupied by all-powerful departments and ministries. In addition, there was also a pure monopoly of the state over the management and organization of the economy.

Economic monopoly

This is the most common type of economic market model. The emergence of this type of monopoly is due to the laws of economic development. In this case, the conversation is about those entrepreneurs who have gained dominant positions in the market. There are two ways that can lead to this.

The first of them lies in the successful development of the company, as well as in the constant increase in its scale due to the concentration of capital. The second direction is faster. It is based on the voluntary merger of firms or the takeover of bankrupt winners. By choosing one or the other path or both at once, the enterprise becomes dominant in the market.

Closed monopoly

This economic structure exists when a firm's dominant position is protected by legal rights or government, allowing it to operate in the absence of competitors. This type of monopoly is the most stable. However, in this case, the company is not able to earn high profits due to government restrictions on its prices and profit margins.

Open monopoly

A similar economic model occurs when a company gains a dominant position in the market as a result of its own proprietary achievements. They could be a new product, marketing developments, new technology, etc.

The characteristics of a pure monopoly of this type are based on its temporary nature. The point is that the benefits associated with an innovation can always be copied or surpassed by competitors. But it is precisely with an open monopoly that a company is able to fully realize the market power it has acquired. This will allow you to get the maximum possible income.

International monopolies

These include a special type of economic market model. The emergence of international monopolies is facilitated by the high level of socialization of production.

The internationalization of the economic sphere also plays an important role. International monopolies are:

1. Transnational. They are national in their capital and international in their scope of activity. An example of this is the Standard Oil of New Jersey concern (USA). It has enterprises in almost 40 countries and foreign assets.
2. Actually international. Such companies disperse their share capital and have a multinational group or trust management team. An example of this is the chemical and food Anglo-Dutch concern Unilever. The number of such monopolists is small, since the pooling of capital from different countries causes great difficulties due to different legislation of states.

Pure competition

The word concurrentia comes to us from the Latin language. Translated, it means competition or clash. If we consider the concept of “competition” from the perspective of economic science, then it represents a struggle between firms on the market for a profitable deal.

Winning such a competition allows them to get maximum profit. Let us consider the main features of perfect competition. Among them:

1. A large number of companies operating independently on the market. At the same time, they all work separately and in isolation.
2. The products offered by firms are standardized and uniform. Such a product does not have significant differences in the level of quality offered. The products sold by firms are similar to each other. In this case, the buyer absolutely does not care which seller he comes to for the purchase.
3. Each firm produces only a small part of the total product. This results in little control over the price level. If they increase, the goods will not be sold, and if they decrease, the company’s income will decrease.
4. There are no serious technological, financial, organizational or legal restrictions on entering or exiting the market of a certain industry.
5. Standardized products occupy a predominant position. This fact does not allow the development of non-price competition.

The market model described above exists in small rural farms, stock exchanges and foreign exchange sales.

As we can see from the above characteristics, markets of pure competition and pure monopoly are clear antipodes to each other.

Oligopoly

We will move on to consider this concept after studying pure competition and monopoly. An oligopoly is where a few large companies dominate. This word, like the term “monopoly,” consists of two words of Greek origin. The first of them is “oligo”, which means “few”, and the second is “poleo”, that is, “I sell”.

Unlike pure competition and monopoly, an oligopoly is a market structure in which only a few sellers offer their products to many buyers. At the same time, there is no clear number of similar firms in the oligopoly criteria. But in economics it is believed that there can be from 3 to 10.

There are several types of oligopoly. Among them:

• pure, in which companies produce a homogeneous product (mineral fertilizers, cement, steel products, etc.);
• with differentiated products (cars, cigarettes, electrical household appliances).

Companies that are part of an oligopolistic model, as in the case of a pure monopoly market, are able to earn high profits. After all, in this case, the entry of outsider firms into the industry is hampered by existing barriers.

Unlike a pure monopoly market, oligopolistic enterprises are obliged to take certain actions based on the behavior of their competitors. The sales volumes of the offered product will depend on this. As we can see, pure monopoly and oligopoly have some common features. At the same time, they also have significant differences.

Monopolistic competition

This term means a market structure with the participation of a large number of firms producing the same type, but at the same time differentiated goods (shoes, perfume, jeans, etc.), competing with each other. Each of the sellers behaves in the same way as in the pure monopoly model. He sets the price for his goods independently. However, there are many sellers of similar things on the market, that is, buyers can find a large number of substitutes for themselves. This results in limited firm control over prices and low sales volumes. Unlike oligopoly and pure monopoly, monopolistic competition uses non-price methods of promoting goods. These include advertising and the assignment of trademarks, which will highlight the distinctive features of the product offered to buyers.

As for entering the market where the model of monopolistic competition is applied, it is practically free. Indeed, in this case, in order to start your own business, you will not need an impressive initial capital, and the entrepreneur does not face any special barriers on this path.

In its external features, monopolistic competition is very similar to pure competition. However, in the first case there is still the presence of albeit limited, but still power over prices. At the same time, companies located in this market offer customers a large selection of a wide variety of products, satisfying almost all the needs of their customers.

Factors of monopolization

What will be the market model? Will it represent a monopoly, pure competition, oligopoly or monopolistic competition? Everything will depend on the existence of barriers that prevent new companies from entering the industry. They are the factors of monopolization. Among them:

1. Effect of scale. There are some industries, such as the automotive industry, as well as the production of aluminum and steel, in which, based on existing technology, the minimum average cost can only be obtained in the long run, and also with large production volumes. If small firms try to enter such an industry, they will not be able to stay in the market, because they will not be able to realize economies of scale. That is, produce products with the same or lower average costs than the monopolist. Most likely, the industry can be considered effective if the entire volume of its products is produced by only one enterprise. Only this will minimize costs.
2. Financial obstacles. Some industries require large capital investments to start production. This is the main barrier for many companies.
3. Patents. Legislative acts of many countries around the world provide legal protection for a new invention for a certain period. Large firms have the ability to finance their own development and research projects or are able to acquire patents from other companies. All this allows them to strengthen their own positions in the market, displace competitors and become elements of a pure monopoly model. Examples of such firms are Xerox, General Motors and Polaroid. They became monopolists thanks to their patents.
4. Licenses. A barrier to a company's entry into the industry is the issuance by the state of a special permit allowing it to engage in a particular activity. This leads to restrictions on product supply and monopolization of the industry. An example of this is the production of veterinary and medical drugs.
5. Private ownership of rare and non-renewable natural resources. An example of this is companies engaged in the production of aluminum (Aluminum Company of America), diamonds (De Beers, South Africa), and nickel (Inco, Canada). These firms avoided monopolistic and pure perfect competition. They achieved pure monopoly thanks to control over raw materials.
6. Unfair competition. There have been cases in history when a company used illegal methods of struggle against rivals. This includes luring away personnel, depriving them of raw materials, as well as sales, declaring a boycott, etc. Today, such methods are prohibited by law.

So, among the objects of our attention was the market - pure competition, monopolistic competition and pure monopoly are often found there.