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In our opinion, the economic essence of competition is manifested in the following:

The law of competition is more effective in influencing the behavior of market participants than the law of supply and demand. Free competition moves prices to the point of equilibrium, which leads to equality of the opposing sides.

Competition plays a very important role:

Through rivalry, as socially established normal conditions for the production and circulation of goods;

Due to market struggle (new products appear);

Market competition eliminates backward and inefficient farms. Those who strive for new ones survive, modern technologies, organizational and economic achievements. Perhaps one of the participants competition dreams of a market without competition, but is it possible to create such a market?

Types of competitive markets

According to the degree of development of competition Kalyuzhnova N.Ya. and Yakobson A.Ya. There are four types of competitive markets. The ability to determine the type of market makes it possible to choose the right strategy of behavior on it.

1) Market of perfect competition.

2) Market of imperfect competition:

a) Monopolistic competition;

b) Oligopoly;

c) Monopoly;

The perfectly competitive market model satisfies three basic conditions. One of these conditions is the homogeneity of products. Homogeneity of products means that the goods are completely interchangeable and only the price can affect the preferences of the buyer. The second condition is the awareness of sellers and buyers about what prices and offers are on the market at the moment. The third condition necessary for the existence of a perfectly competitive market is the absence of barriers and freedom to enter and leave the market. Such freedom lies in the mobility of resources. As buyers' preferences change, sellers can easily shift to other more profitable products.

The market of perfect competition never occurs in its pure form, but the model of perfect competition plays an important role.

This model can be used to judge the activity small companies trading in homogeneous goods;

It allows you to understand the logic of the firm's behavior, as if it were operating in a perfectly competitive market;

One of the criteria for perfect competition can be considered the presence of absolute elastic demand for products, which determines the pattern of income.

Perfect competition also has some disadvantages:

Small companies, typical of a perfectly competitive market, cannot use more efficient technologies, since only large companies can achieve economies of scale;

The market of perfect competition is not able to stimulate scientific and technological progress;

Real markets are markets of imperfect competition. The prerequisites for such competition are:

Large market share of individual manufacturers;

The presence of barriers to entry into the market;

Product heterogeneity;

Inadequacy of market information;

One type of imperfect competition market is a monopolistic market.

In such a market, there is only one supplier of goods. A monopolist can set any price or supply any number of products to the market, but he cannot combine these two actions, since at a high price the demand for a product will decrease regardless of the presence of competitors. The monopolist also dictates the quality of the product, since the consumer deprived of the right choice.

There can be several reasons for creating a monopoly:

Possession of limited resources;

Acquisition of competing companies;

Formation of monopolistic associations;

Formal creation of a monopoly when competition is undesirable;

Monopoly by its emergence creates very rigid entry barriers for other enterprises. Such barriers may include:

Legislation providing for monopoly;

Economies of scale;

Many of the listed barriers cannot be called insurmountable, they can be dealt with if there is competitive advantage. Small producers may not compete with a monopolist, but find a niche for which he does not even pretend.

A monopoly that is protected by the state is necessary. There are many important industries in society that need centralized management.

However, the monopolistic market also has disadvantages:

Freedom in the formation of prices for goods under a monopoly infringes on the interests of consumers;

The absence of competitors can lead to a decrease in the quality of goods;

These facts are very important, therefore, in countries with a developed market economy, an antimonopoly policy is being formed, the implementation of which is regulated by special legislation.

Another market of imperfect competition is oligopolistic.

This market is divided by a small number of large firms. Such a market has high entry barriers, and therefore is practically closed to small companies. However, oligopolistic firms cannot be free to set prices, since they are still competitors among themselves.

Each of the participants in the oligopolistic market is dependent on the behavior of competing firms. Large size and large capital make companies immobile in the market.

The important characteristics of an oligopoly are:

1) Economies of scale of production. Increasing the volume of production and sales of products leads to lower costs per unit of output. This volume may be able to satisfy most of the demand for these products.

2) Interdependence of firms - oligopolists. An oligopolistic company can independently set the price for its products, but the consequences of such a decision can be unpredictable, since the reaction of competitors may be different. Therefore, oligopolies try not to do this.

3) Price rigidity and non-price competition. Those companies that are not market leaders avoid price competition. Instead, they are trying to increase market share.

4) Mergers and acquisitions. With the help of such methods, you can increase your market share.

5) The desire for collusion. Collusion occurs between oligopolies regarding the level of prices and production. Through such collusion, companies increase their control over the market. This strategy is beneficial for all involved. However, this is not always possible to achieve. Direct collusion becomes possible when new companies cannot enter the market due to high entry barriers; a small number of companies operate; product homogeneity is very high; demand for products is constantly growing; entry into the market is hindered by peculiarities of legislation.

There is also implicit collusion. One such collusion is price leadership, where a large company changes its price and others follow suit.

6) Barriers for enterprises to enter the market. As a result of high entry barriers, the level of market concentration and the preservation of oligopolies are maintained.

Competition is understood as "rivalry" between individuals (competitors interested in achieving the same goal).

Competition - the process of interaction, interconnection and struggle between enterprises operating in the market in order to provide the best opportunities for their products and meet the diverse needs of buyers.

There are five competitive forces that determine the attractiveness of an industry and the position of a given organization in the competition:

• 1. Emergence of new competitors (Potential competitors)
• 2. Threat to replace this product with new products.
• 3. The strength of the supplier's position.
• 4. The strength of the buying position
• 5. Competition among manufacturers in the industry itself (current competitors)

Consider these competitive forces.

There is a concept of “barrier to entry into the industry”, the height of which should be taken into account both by organizations within the industry (for them, the higher it is, the better), and by organizations located outside.

The height of the barrier is determined by the following factors:

• 1. Economy of scale - the food and marketing costs of firms that develop the market or enter the market with a new product are higher, which, with equal prices, ensures that these organizations receive less profit or loss. And do we need it?
• 2. The familiarity of the brand of goods. Consumer stereotypes work regarding the brand of a particular product. (Leavis is a three-piece suit)
• 3. Fixed costs associated with entering a new industry. (requirements of standards)

e.g. ISO-900, req. design, security, etc.

• 4. The cost of new fixed assets, which in many cases must be created to release a new product.
• 5. Access to the distribution system. The need to create distribution channels.
• 6. Access to the industry's supply chain.
• 7. Lack of experience in the production of this type of product.
• 8. Possible responses of industry enterprises - refusal to sell patents, lobbying in the government, etc.

The threat of substitute goods refers to the production of new products that satisfy the same need, but created on the basis of fundamentally new ideas. When assessing the degree of threat of a substitute product, the characteristics, price and attitude of the consumer are taken into account.

The strength of the position of suppliers - depends on the type of market. The strength of the position of suppliers is determined by the following factors:

• 1. variety and high quality of the products and services provided;
• 2. the possibility of changing suppliers;
• 3. the cost of switching consumers to other suppliers;
• 4. the value of the volume of products purchased from suppliers

The strength of the buyers' position is determined by the following factors:

• 1. the ability to switch to the use of other products;
• 2. costs associated with this switch;
• 3. volume of purchased products.

In a market economy, it is necessary to carefully study and analyze the competitive environment in which the firm operates.

The following questions should be answered first:

Who are your firm's main competitors in terms of:

assortment, product groups;

geographic location;

market segments;

pricing policy;

distribution and marketing channels.

What is the market share of your company?

What is the competitor's strategy?

What methods are used by competitors in the struggle for the market?

What is financial condition competitors?

Organizational structure and management of competitors?

What is the effectiveness of competitors' marketing programs (product, price, sales and communication promotion)?

What is the likely reaction of competitors to your firm's marketing program?

At what stage of the invariable cycle is your product and the competitor's product?

Four possible competitive structures are identified and a marketing strategy is chosen accordingly.

Options	Perfect Competition	Monopolistic competition	Oligopoly	Monopoly
Number of firms producing products	Many independent firms; no market control	Many firms producing similar goods and services	Several large firms producing goods and services	One product, one company
Price control	No. Prices are determined by the market	Impact limited to replacement	There is a "price leader" influence	Practically full control
Product differentiation	No. Products are inseparable by properties and qualities	Goods and services are differentiated for market segments	Significant for individual products (cars), small for standardized products (gasoline)
Ease of exit	Easy exit and entry	Relatively easy entry and exit	Difficult, often requires a large investment	Very difficult

It is advisable to analyze the characteristics of the main competitors in the following sections:

What is the largest market each competitor operates in?

Define market segments.

How do your competitors usually enter the market.

How competitors are prioritized in this market.

How quickly are competitors adapting to different situations on the market? How flexible is their market strategy.

How competitors react to the possibility of market diversification.

How effectively do your competitors respond to the needs and wishes of consumers.

How do they act when filling a "niche" in consumer demand.

How effective are your competitors in terms of renewal life cycle goods.

To what extent and by what means are your competitors trying to increase their market share.

How wide is the range of products and services offered by your competitors.

How flexible are competitors' manufacturing systems, their engineering departments.

How do your competitors behave with regard to new product development.

How flexible are your competitors in monitoring the compliance of their production facilities with market conditions.

How do your competitors behave in the field of pricing for new products.

What pricing policies do competitors follow for already manufacturing-based types of products and services.

Promotion of the product on the market.

What kind of sales divisions and services do competitors have.

How closely integrated among competitors is the activity of sales services with the strategy of the enterprise in the field of advertising its products, the strategy for developing sales potential.

Organization of sales and distribution.

What strategy did your competitors follow in the sales area to enter this market.

Indicate which forms of marketing competitors use and prefer to use.

How do your competitors control distribution channels?

The competitive environment of the enterprise and the factors of production impact on it

graduate work

1.2 Types of competitive markets

According to the degree of development of competition Kalyuzhnova N.Ya. and Yakobson A.Ya. There are four types of competitive markets. The ability to determine the type of market makes it possible to choose the right strategy of behavior on it.

1) Market of perfect competition.

2) Market of imperfect competition:

a) Monopolistic competition;

b) Oligopoly;

c) Monopoly;

The perfectly competitive market model satisfies three basic conditions. One of these conditions is the homogeneity of products. Homogeneity of products means that the goods are completely interchangeable and only the price can affect the preferences of the buyer. The second condition is the awareness of sellers and buyers about what prices and offers are on the market at the moment. The third condition necessary for the existence of a perfectly competitive market is the absence of barriers and freedom to enter and leave the market. Such freedom lies in the mobility of resources. As buyers' preferences change, sellers can easily shift to other more profitable products.

The market of perfect competition never occurs in its pure form, but the model of perfect competition plays an important role.

thanks to this model, it is possible to judge the activities of small companies selling homogeneous goods;

it allows you to understand the logic of the firm's behavior, as if it were operating in a perfectly competitive market;

One of the criteria for perfect competition can be considered the presence of absolute elastic demand for products, which determines the pattern of income.

Perfect competition also has some disadvantages:

small companies, typical of a perfectly competitive market, cannot use more efficient technologies, since only large companies can achieve economies of scale;

the market of perfect competition is not able to stimulate scientific and technological progress;

Real markets are markets of imperfect competition. The prerequisites for such competition are:

large market share of individual manufacturers;

the presence of barriers to entry into the market;

product heterogeneity;

inadequate market information;

One type of imperfect competition market is a monopolistic market.

In such a market, there is only one supplier of goods. A monopolist can set any price or supply any number of products to the market, but he cannot combine these two actions, since at a high price the demand for a product will decrease regardless of the presence of competitors. The monopolist also dictates the quality of the goods, since the consumer is deprived of the right to choose.

There can be several reasons for creating a monopoly:

possession of limited resources;

takeover of competing companies;

the formation of monopolistic associations;

the official creation of a monopoly in the case when competition is undesirable;

Monopoly by its emergence creates very rigid entry barriers for other enterprises. Such barriers may include:

legislation providing for a monopoly;

economies of scale;

Many of these barriers cannot be called insurmountable; they can be overcome if there are competitive advantages. Small producers may not compete with a monopolist, but find a niche for which he does not even pretend.

A monopoly that is protected by the state is necessary. There are many important industries in society that need centralized management.

However, the monopolistic market also has disadvantages:

freedom in the formation of prices for goods under a monopoly infringes on the interests of consumers;

the absence of competitors can lead to a decrease in the quality of goods;

These facts are very important, therefore, in countries with a developed market economy, an antimonopoly policy is being formed, the implementation of which is regulated by special legislation.

Another market of imperfect competition is oligopolistic.

This market is divided by a small number of large firms. Such a market has high entry barriers, and therefore is practically closed to small companies. However, oligopolistic firms cannot be free to set prices, since they are still competitors among themselves.

Each of the participants in the oligopolistic market is dependent on the behavior of competing firms. Large size and large capital make companies immobile in the market.

The important characteristics of an oligopoly are:

1) Economies of scale of production. Increasing the volume of production and sales of products leads to lower costs per unit of output. This volume may be able to satisfy most of the demand for these products.

2) Interdependence of firms - oligopolists. An oligopolistic company can independently set the price for its products, but the consequences of such a decision can be unpredictable, since the reaction of competitors may be different. Therefore, oligopolies try not to do this.

3) Price rigidity and non-price competition. Those companies that are not market leaders avoid price competition. Instead, they are trying to increase market share.

4) Mergers and acquisitions. With the help of such methods, you can increase your market share.

5) The desire for collusion. Collusion occurs between oligopolies regarding the level of prices and production. Through such collusion, companies increase their control over the market. This strategy is beneficial for all involved. However, this is not always possible to achieve. Direct collusion becomes possible when new companies cannot enter the market due to high entry barriers; a small number of companies operate; product homogeneity is very high; demand for products is constantly growing; entry into the market is hindered by peculiarities of legislation.

There is also implicit collusion. One such collusion is price leadership, where a large company changes its price and others follow suit.

6) Barriers for enterprises to enter the market. As a result of high entry barriers, the level of market concentration and the preservation of oligopolies are maintained.

The third type of imperfect competition is the market of monopolistic competition.

The concept of monopolistic competition was developed by E. Chamberlin. He was the first to notice that the differentiation of a product contributes to the emergence of several separate markets instead of one. In these markets, there is a wide variety of prices, costs, output of products of various groups.

Monopolistic competition is a type of market structure in which there are many producers who produce a differentiated product. The products of such companies are similar to each other, but are not completely interchangeable, i.e. a small company produces a product that is slightly different from a competitor's product.

The main features of monopolistic competition are:

a monopolistically competitive company sets its own price;

company access to the market is free and attractive to firms with competing brands of goods;

there is no dependence of firms on each other, collusion in such a situation is impossible;

rivalry can be both price and non-price;

This type of market provides an opportunity for producers to realize themselves. As a result, consumers gain greater freedom in choosing products. However, monopolistic competition can lead to the emergence of new monopolies or oligopolies, which will develop until government intervention occurs or small companies succeed, which in principle is rare.

Monopolistic associations play an important role in the modern market, which, having advantages in the production of goods, try to set a higher price for them and thus prevent the establishment of an equilibrium price. However, no matter how much they want to implement their plans, by force of circumstances they are forced to reckon with the average price, as A. Smith (1723-1790) argued, the natural price. That is why he actively opposed state intervention in the market economy. A. Smith was a supporter of the import of imported goods when they turned out to be cheaper than domestic ones.

Nobel Laureate in Economics Friedrich von Hayek (1899-!988) wrote that when demand for a product exceeds supply, there is a shortage and the price inevitably rises. Conversely, when there is a surplus of goods, and demand decreases, the price falls. Therefore, the market is a self-organizing and self-regulating system.

However, the market should not be considered an absolutely self-organizing system. After the Great Depression (1929-1933), economists recognized the need for government intervention in the functioning of the market during recessions and crises. The very nature of socio-economic systems creates such a need, because people can correct the shortcomings of self-organization. external organization, i.e. consciously manage and regulate the system. However, these factors should not be opposed to each other, but, on the contrary, should be in accordance with the requirements and internal capabilities of the system's self-organization.

Considering the merits market competition, it is necessary to mention the shortcomings. Competition can lead to disproportions between supply and demand, irrational use of society's limited resources. Competing companies carefully guard their developments in the field of technology, as this helps to win in the competition, but this can lead to a slowdown in technological progress. Competitive market fails to solve the problem social inequality and equal distribution of income, it is designed to manage the economy rationally through the use of resources.

Market relations can be considered only when prices are set taking into account supply and demand, because it is prices that are the main regulator of the market, as they reflect the relationship between supply and demand. Given the demand, the market can increase the output of goods needed by consumers. To do this, manufacturers begin to develop new production technologies, master the achievements of scientific and technological progress, and improve the quality of the product. In the competitive struggle for the market, the winner is the one who can achieve High Quality goods at the lowest cost. It is competition that makes manufacturers more enterprising and inventive, they must eliminate the shortage in time and organize or expand the production of the necessary goods.

The most important function of the market is to meet the needs of consumers in a timely manner. This function is carried out through the relationship of supply and demand.

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Modern enterprises are in constant search of countering competitors and adapting to the conditions external environment. One of distinguishing features of the world economy is that the economic relations of its subjects are in competition, which is immanent (inherent) in the market economy system.

Competition is strong driving force the entire system of the market economy, the type of relationship between producers regarding the establishment of prices and volumes of supply of goods on the market.

The stimulus that motivates a person to compete is the desire to surpass others. Competition is a dynamic process, accelerating its movement. It contributes to a better supply of goods to the market. Competition is an element of the market mechanism that ensures the interaction of market entities in the production and marketing of products, as well as in the field of capital investment.

Competition(lat. Concurrere - collide) means the rivalry between individual subjects of the market economy for the most favorable conditions for the production and sale (purchase and sale) of goods.

In a market economy, such a collision is inevitable, because it is generated by objective conditions:

A large number of equal market entities;

Complete economic isolation of each of them;

Dependence of market entities on market conditions;

Confrontation with all other market entities for the satisfaction of consumer demand.

Competitive struggle for economic prosperity and survival is the economic law of the market economy. It is a struggle among sellers, among buyers, between sellers and buyers. Sellers want to sell their products at a higher price, but competition forces them to sell their products cheaper to stimulate consumer demand. Sometimes used in the market dumping(eng. Dumping - dumping, artificial reduction in prices for goods in foreign markets to conquer them, eliminate competitors) - the sale of goods at extremely low (so-called bargain) prices.

Competition is the engine economic progress, since market rivalry leads to success if the entrepreneur cares not only about maintaining, but also about expanding his production. To do this, he tries to improve the technique and organization of labor, improves the quality of goods, reduces the cost of producing a unit of output and thereby has the opportunity to reduce prices, expands the range of goods, improves trade and writing services for customers.

The form of existence of competition is a social system of norms and rules of market behavior of business entities (enterprises), which is determined by market methods of functioning of the economic system and state norms (economic policy).

Modern economic science identifies two forms of competition; free (pure or perfect) and limited (imperfect), which was the result of the evolution of the market system. As a result, the laws of competition are modified, the manifestation of which is that free competition turns into regulated competition.

As historical experience shows, the evolution of the market system went through three stages:

I) from the 16th century until the 70s of the XIX century, which was characterized by the dominance of free competition;

II) from the 70s of the XIX century. to the 1940s, where monopoly and market power become the dominant market structure;

III) from the 30-40s of the XX century. until now, which is characterized by the dominance of limited (imperfect) competition based on state restriction monopoly and promotion of competitive relations. It comes in two forms - monopolistic competition and oligopoly. Free competition has the following features:

Mobility (mobility) of production resources within the market;

Free entry to and exit from the market;

Independence of actions of manufacturers (sellers) from each other;

Homogeneity (standardization) of the produced product;

Availability and completeness of pricing information.

So, perfect competition corresponds to a model of market relations in which:

The goods are produced by a very large number of independent enterprises, so the share of each firm in the total production of the industry is extremely limited;

The amount of capital employed by an individual enterprise is so small that no firm has the ability to significantly affect the volume of supply of goods;

Competing firms produce standardized products (this means that for the consumer there is no priority of the manufacturer)

Possible free entry into the industry, exit from the industry (the low quota of each firm leads to the fact that the market for a standardized product does not actually respond to the appearance or disappearance of another seller of the product);

The individual firm has no influence on the market price level.

Related to this form of competition is the notion of efficient competition, where sellers and buyers act independently, even if the market is not purely or fully competitive.

During the period of domination of free competition, not only intra-industry, but also inter-industry competition dominated.

Intra-industry competition- competition between producers in the same industry producing a standardized (homogeneous) product. its result is the formation of a single market value, or price, of the commodity. Interindustry competition- this is a struggle for profitable areas of capital investment, its mechanism is the free movement of capital from less profitable to more profitable industries. The result is the formation of an equilibrium (average) rate of return, that is, equal capital receives equal profit, regardless of the industry of its application.

In modern conditions, the market model of pure competition happens very rarely, the time of its domination is in the past (XVII-XIX centuries). Today, it finds itself in limited markets for some agricultural products (corn, cotton, wheat) and partly in the markets for securities and foreign currencies.

Perfect (pure, free) competition allows the market mechanism of self-regulation for prices, supply and demand to operate in full force.

Free competition necessarily has a price character. Price competition is based solely on price fluctuations, because the standardized product of different firms does not have much difference. Thus, the model of perfect competition operates on the principles of "invisible hand" and is controlled by the price mechanism. The price is sensitive to changes in supply and demand, thereby determining the required production volumes, which makes it possible to prevent overproduction.

The impossibility of direct intervention in the pricing mechanism forces firms (to increase revenues) to maximize production volumes, stimulates full and rational use all kinds of resources. Thus the competitive market mechanism decides economic problems without needing the intervention of bureaucracy (government regulation).

So, perfect competition is an ideal model for the functioning of market relations and can be a kind of criterion for assessing the perfection and efficiency of other types of market structures.

Free competition led to the development of concentration and centralization of production and capital, and at a certain stage (the last third of the 19th century) led to the emergence of monopolies.

Monopoly- the exclusive right of the state, production, organization, seller (that is, one that belongs to one person, group of persons or the state) to carry out any economic activity. By nature, monopoly is a force that undermines free competition, the spontaneous market and becomes the basis for the formation of market power.

market power- the degree of control a firm or group of firms has over price and production decisions in a particular area. In the case of a monopoly, the firm has a high degree market power, firms in perfectly competitive industries have no market power.

A monopoly firm acquires an exclusive position in the industry market, due to which it sets monopolistically high prices (if it is a manufacturer) or monopolistically low prices (if it is a buyer or consumer) for a product and receives monopoly high profits, keeping competitors out of them.

The monopoly became the dominant market structure at the second stage of market evolution, which lasted from the 70s of the 19th century. until the 30-40s of the XX century. In most industries, monopolistic non-competitive markets have formed, in which the market mechanism has lost the ability to restore market equilibrium under the domination of monopolistic structures:

One gigantic firm dominates the region;

She produces a unique product;

Entrance to the industry is completely blocked;

There is significant price control in the industry. That is, monopoly denies competition and is based on

exclusivity of the economic position of one entity exercising market power.

Relying on different reasons emergence, monopoly can be reduced to three main forms: natural, administrative and economic.

natural monopoly arises due to objective reasons, when owners become natural monopolists - business entities that have at their disposal rare and unique deposits or land plots with unique natural properties (rare metals, land, etc.).

Administrative monopoly arises because the state (government or local authorities) creates exclusive privileged conditions for economic activity for certain enterprises or entire industries. Such business entities find themselves in a situation of artificially created protection from competition, which generates another phenomenon of economic exclusivity.

Economic (agglomeration) monopoly arises on the basis of the laws of economic development, when an enterprise finds itself in a situation of economic exclusivity, which is manifested in the possibilities of influencing pricing. Achieving favorable prices, such enterprises begin to receive monopoly profits.

The following concepts are associated with market power: monopsony(monopolistic position of one buyer in a particular market) oligopsony(type of market structure where there is a group of buyers of a particular product); duopoly(there are only two suppliers of a certain product, and there is no monopoly collusion between them about prices, markets, production quotas) bilateral monopoly(a type of market structure, when there is a confrontation between a single supplier and a single, often united consumer) in the industry market.

Elucidation of the economic nature and forms of monopoly in general makes it possible to thoroughly clarify the essence of pure monopoly as a special type of economic structure.

As noted above, the third stage in the evolution of the market system is associated with the dominance of limited (imperfect) competition, which is presented in two forms - monopolistic competition and oligopoly.

Monopolistic competition has the following features:

There are several dozen predominantly medium-sized firms operating on the industry market, competing with each other;

Competitors produce a differentiated product (a product of the same type, but with certain features inherent only to it), each of the firms has a monopoly on the release of its special product;

New competitors enter the market quite easily with their own differentiated product;

Non-price competition reigns, manifested in advertising, the existence of trademarks;

Price control exists within very narrow limits (on the price of one's own differentiated product).

Markets of monopolistic competition are most common in the modern market economy. This type of market structure covers the production of clothing and footwear, cosmetics, electrical appliances, medicines, personal computers, stationery, confectionery and sweets, textiles, retail, food industry enterprises, consumer services etc.

Another common form of imperfect competition, along with monopolistic competition, is oligopoly (Greek Oligos - few, poleo - sell, trade). It represents a type of market structure that has the following differences:

Presence of several large manufacturers in the region (from 2 to 10);

Competing firms produce both standardized (same type) and differentiated (excellent in quality, amenities, aesthetics) product;

There are significant obstacles to the penetration of another competitor into the industry, primarily due to large sizes capitals;

Price control is limited or limited (in the case of collusion between competitors on price levels, markets, etc.);

A small number of firms in the oligopolistic market forces a large-scale application of non-price methods of competition.

In conditions of approximately the same financial and technological resources, the vast majority of competing large corporations refuse to use price methods of influencing an opponent, since, firstly, it is very expensive, because each manufacturer understands that when he decides to reduce the price of his product, the competitor will the same (from such a price maneuver, when competitors know everything about each other, there can only be loss of income); secondly, it practically does not change the market position. It is economically more profitable to use non-price rivalry. Since the mid-1950s, the period of the development of scientific and technological revolution, the most important methods of conducting intra-industry competition have been the renewal of goods and their timely entry into the market; improving the range and quality of products; improving the forms of attracting and serving customers, the use of price discrimination methods.

Price discrimination- simultaneous sale of the same goods to different categories of buyers at different prices, when the price difference is not justified by production costs; pricing practices are declared criminal (for example, under the Clayton Act in the USA) if they restrict competition. There are various ways in which firms differentiate buyers into those who can pay more and those who can only buy at low prices. Potential customers of the firm with more elastic demand for the product are subject to discounts, and customers with less elastic demand are subject to price discrimination.

Most characteristic feature oligopolistic model, focuses the action of all the previous ones, is the dependence of the behavior of each firm on the reaction and behavior of a competitor.

This feature was first noticed in the 30s of the XIX century. French economist A. Cournot, who is considered the founder of the theory of oligopoly. Considering the interactions of oligopolists, he showed that each firm will seek to sell the quantity of products that maximizes its income.

To measure the degree of monopoly power in economic theory use the Lerner index, the Garfindel-Hirschman index, the thumb rule.

Oligopolistic markets are also very common. They exist in the production of steel, iron, rolled products, aluminum, cement, alcohol, mineral fertilizers (homogeneous products), as well as household appliances, automobiles, ships, wholesalers, etc. (differentiated product).

If in the market of monopolistic competition there are no special obstacles to the implementation of intersectoral competition, then in the oligopolistic market its limitations are very significant. Therefore, new methods of intersectoral competition are used: diversification of production, vertical integration and conglomeration.

Diversification of production involves the emergence of very large firms that operate in several related industries. By doing this, they limit dependence on suppliers of resources and components, weakening the position of the competing industry. Vertical integration is manifested in the unification within one company of the technological chain in the production of a product from initial stages before its implementation. Conglomeration is the association of the capitals of unrelated industries in one huge firm.

All this leads to the emergence of huge diversified firms operating mainly in various oligopolistic markets. Here, intersectoral competition is carried out, as a rule, through internal company transfers of capital.

According to the research of the English economist M. Porter, the state of competition in any competitive market can be characterized by five competitive forces:

rivalry between competing sellers;

Competition from goods produced by firms in other industries and worthy substitutes (substitutes), as well as competitive in price;

The threat of the emergence of new competitors (the arrival of new firms leads to the upper limit of the industry's profitability);

Economic and trade power of suppliers (suppliers' ability to dictate terms)

Economic opportunities and trading abilities of buyers (the influence of buyers on the level of profitability of the company, the quality of goods, the provision of credit).

These five forces of competition ultimately determine the conditions under which each market and the economic units (firms) that form it operate. The state of each force and their joint action determine the possibilities of a particular type of market structure in the competitive struggle and its potential.

In M. Porter's model, the value and strength of influence of each competitive factor change from market to market, determining prices, costs, investment in production, sales of products and business profitability. Suppliers and buyers, trying to use a favorable situation for them, reduce the company's profit. Competition within the industry also reduces profits, because in order to maintain a competitive advantage, you have to increase costs (advertising, marketing, etc.) or lose profits due to lower prices. The availability of substitute products reduces demand and limits the price a firm can charge for its product.

When developing strategies, enterprises must take into account substitutes, is a force, determines the pricing policy of the enterprise, the policy in the field of product renewal, as well as the economic opportunities and trading abilities of buyers and the emergence of new competitors.

Theoretical models of competitive markets were developed in the 30-60s of the XX century. (effective competition - by the Austrian theorist I. Schumpeter; monopolistic competition - by the American E. Chamberlin; oligopoly - by the American E. Cherberlin and his compatriot J. M. Clerk; imperfect competition - by the English theorist J. Robinson), when it became necessary to overcome the monopolistic market structure .

Summing up the consideration various models market, we can conclude that in modern conditions the most widespread are such types of market structure as monopolistic competition and oligopoly. That is, the modern competitive model is a kind of so-called reasonable competition (in the words of P. Samuelson). Large firms have always sought and will strive for a monopolistic position in the market. Therefore, the effective functioning of the modern market system necessarily presupposes conscious state regulation, stimulation of "conscious", reasonable competition.

Such regulation is carried out by limiting (and sometimes by legislative prohibitions) those scales of concentration and centralization of capital at which a monopoly begins, that is, reasonable competition is a consciously supported government regulation the level of competition, which becomes an obstacle to the monopolization of the economy.

Competition is a necessary element of a market economy, one of the main properties of the market. Competition(from lat. concurrere- collide) – it is a rivalry between the participants of the market economy for the realization of their economic interests. Fight of all against all: between sellers, buyers, sellers and buyers. Purpose of competition- drive competitors out of the market and strengthen their position, expand their market share, maximize profits.

Competition in the market appears in various forms and is carried out by various methods.

The form of competition can be intra-industry and inter-industry. In the first case we are talking about competition between similar products that satisfy the same need, but differ in price, quality or assortment. This type of competition is called subject, or intercompany.In the second case, goods that satisfy various needs are included in the competition, i.e. there is a struggle for the effective demand of the population and the needs of production. This type of competition is called functional.

According to the methods of implementation, competition is divided into price and non-price. Price competition- this is competition, in which the means of defeating the enemy is an increase or decrease in price. In a civilized market, price reduction occurs either by reducing production costs or by reducing profits. Recently, interest in price competition has again increased in developed countries due to the introduction of resource-saving technologies and savings on production costs.

Non-price competition- this is competition, in which non-economic methods act as a means of defeating the enemy: improving product quality, after-sales service, marketing, etc. Of particular importance are such product parameters as environmental friendliness, energy intensity, safety, ergonomic and aesthetic indicators. An increasingly important role in the competitive struggle is occupied by the reliability and reputation of the manufacturer or supplier of goods, its prestige (image). Trademarks and trademarks of firms are becoming important instruments of non-price competition in the market.

Depending on the type of competitive environment in the market, perfect and imperfect competition are distinguished.

Perfect Competition characterized by five main features:

Many buyers and sellers, and none of them can significantly affect the demand or supply of goods in the market;

Homogeneous goods and services are offered for sale;

None of the buyers or sellers has more information about this market than the others, can not exercise control over the price and volume of purchase and sale, which, in turn, creates conditions for their constant fluctuations;

Buyers and sellers are free to enter and leave the market.

Perfect competition is rare in developed countries. Examples of perfectly competitive markets are the market for agricultural products, the securities market, and the foreign exchange market. The remaining markets do not meet the above criteria and can be defined as markets of imperfect competition.

Imperfect Competition is defined as a market in which either buyers or sellers have the ability to influence the market price.

An extreme case of imperfect competition is pure monopoly. Its main features are:

The only seller in the market;

The product being sold is unique in its characteristics and has no close analogues;

The seller exercises full control over the price of the goods and its volume;

- “Barriers” to market penetration by competitors are practically insurmountable.

There are natural and artificial monopolies. natural monopoly associated with the ownership of rare and unique Natural resources(land and its subsoil). In modern conditions, a natural monopoly includes industries where competition is inappropriate and can lead to an increase in costs and prices (urban infrastructure: gas, water and electricity). Basically, the activities of natural monopolies are controlled by the state.

emergence artificial monopoly it is possible in two cases: as a result of a short-term excess of demand over the supply of any product or as a result of collusion and suppression of competitors with the help of artificially created barriers.
In the first case, there casual, or open, monopoly, not protected by anything from the invasion of the market by other competitors, when the profitability of this market will be discovered by them. Monopoly of the second type, or closed, arises in conditions of concentration of production (acquisition of small competitors by large corporations) and the establishment of artificial barriers for competitors in the form of licenses, patents, copyrights, etc.

Monopolies can take various organizational forms, depending on the degree of concentration of capital. The simplest form is cartel– an agreement between individual producers who determine output quotas and divide sales markets. A higher form of concentration syndicate in which firms jointly sell products. Trust- this is a higher form of concentration of capital, provides for the creation of joint ownership and general management of production.

In modern conditions, the most common forms of large firms are corporations and conglomerates whose capital is formed on the basis of production diversification, i.e. penetration of capital into other sectors of the economy.

The second type of market of imperfect competition is oligopoly. His characteristic features are:

The presence of several large firms on the market, each of which controls a significant share of the market;

Firms' products can be either standardized ( pure oligopoly market, and differentiated ( differentiated oligopoly market);

Exist high barriers to entry into the industry: the penetration of new competitors into the market is very difficult, because oligopolistic firms, as a rule, enter into a tacit collusion when dividing the market and when ousting new competitors, they act in a very coordinated manner;

Price control is limited by the interdependence of firms that keep a close eye on each other and, at the slightest opportunity, expand the market for their product;

There is both price (pure oligopoly market) and non-price (differentiated oligopoly market) competition.

Examples of an oligopoly market are the production of steel, automobiles, household appliances, sports equipment, etc.

The third type of market of imperfect competition is monopolistic competition. As the name itself indicates, this type of market is characterized by features of both monopoly and pure competition. Characteristic features of the market of monopolistic competition are:

The presence of many sellers in the market;

Entering the market, as well as leaving it, does not present any difficulties;

Similar products (substitutes) are presented on the market, which differ from each other in individual quality parameters. Product differentiation is the main hallmark this market;

Price control is negligible due to the limited market share of an individual producer.

The characteristic features of the four main market models discussed above are given in Table. 2.2.

Less common, but there are other market models - monopsony, oligopsony and bilateral monopoly.

Monopsony This is a one buyer market. For example, a large factory in a settlement is practically the only buyer of labor.

Oligopsony is a market for a few large buyers. For example, three or four firms employ the majority of workers in a particular labor market.

Bilateral monopoly It is a market where one buyer confronts one seller. This situation is typical for the labor market, when in a small town one firm is the main employer, and it is opposed by the union of workers.

It should be especially noted that the markets of pure competition and pure monopoly are quite rare in modern economy. The most widespread markets are oligopoly and monopolistic competition.

However, in economic theory, pure (perfect) competition is of particular importance. It is not only historically the first model of the market, but also allows you to build some kind of ideal model of the functioning of the economy, in comparison with which you can study real market structures.