In competitive economic conditions Entrepreneurs independently search for consumers in order to achieve the goals of their activities: maximizing profits, expanding sales, increasing market share. Competition forces entrepreneurs to act effectively in the market, forcing them to offer consumers a wider range of goods and services at lower prices and of better quality.

This is what contributes to economic progress: production efficiency increases, conditions are created for the concentration of resources in the most productive sectors of the economy. The competitive environment encourages entrepreneurs to actively introduce innovations, improve technologies and rationally use limited resources. Ultimately, the welfare of consumers increases, prices for traditional types products and services, new products and new manufacturers are constantly appearing on the market. By giving the consumer the right to choose, market competition ensures a healthier economy by preventing inefficient enterprises from operating.

At the same time, any economic entity is characterized by the desire for a monopoly, to oust a competitor from the market, and to expand the scope of its activities. By acquiring and strengthening market power, entrepreneurs seek to establish control over prices and factors determining the activities of the enterprise in the market. In the name of maintaining their market power and control over the market situation, actions can be taken that limit competition, artificial barriers to entry into the market can be created, and anti-competitive agreements can be concluded, for example, on restrictions on sales volume, price fixing, or division of the market. In turn, restricting competition significantly distorts the action of market forces, leads to irrational distribution of public resources, and negatively affects economic activity.

One of the most important factors that increases efficiency economic system market type, serves as competition between enterprises, organizations, and entrepreneurs. This is the strongest way to continuously excite economic entities. WITH to a certain extent Conventionally, competition can be called a civilized form of struggle for existence. The desire to bypass a competitor, not to give in, not to lag behind creates a powerful incentive for economic progress. And the threat of dropping out of the game in the struggle for economic existence and prosperity works more reliably than all other incentives.

IN market economy Thanks to the variety of forms of ownership and freedom of economic behavior, conditions for competition arise and are automatically maintained. In contrast to artificial, imposed, externally organized competition, the market system generates competition itself, by its nature, as a result of which there is reason to consider the principle of competition to be immanent in such a system.

Competition - (from the Latin Concurrer - to collide) - the struggle of independent economic entities for limited economic resources. This is an economic process of interaction, interconnection and struggle between enterprises operating on the market in order to ensure better opportunities marketing its products, satisfying the diverse needs of customers. There is always intense competition between producers on the world market. Successful performance in foreign markets requires a significant increase in the competitiveness of the domestic goods offered. When importing, the use of competition from foreign sellers makes it possible to achieve more favorable purchasing conditions.

But the concept of competition is so ambiguous that it is not covered by any universal definition. This is both a way of managing and a way of existence of capital, when one capital competes with other capital. Competition is seen as both the main essential feature, the property of commodity production, and the method of development. In addition, competition acts as a spontaneous regulator of social production.

Market competition is one of the most important categories of modern economic theory. Not a single model of the market functioning mechanism can do without this concept. Moreover, the theory of market competition, unlike many other branches of economic theory, finds and has found before, for at least three last centuries, the widest practical application. Starting from mercantilists to modern legislative provisions in the field of antimonopoly policy, states with traditional market economies are trying to regulate the market, providing it with a certain competitive environment.

Both theory and practice over a long period of time show that market mechanism is not ideal in the sense that it gives rise to certain unstable phenomena. Here we can distinguish two types of instability. Firstly, instability generated by the closed nature of the regulatory market mechanism. In other words, this system is subject to the laws of automatic control systems, which, in principle, have a tendency towards oscillatory phenomena, which is recorded by the facts of periodic declines, rises and crises of production. Although a more or less effective anti-crisis policy has now been developed, the presence of instability, as inherent in the market system, is beyond doubt. Another type of instability concerns the problem we are considering and is associated with competition. It is based on a pattern known as uneven development productive forces. It manifests itself both within an individual national economy and internationally. According to this pattern, on at the moment Over time, market demand is provided by goods produced by different technological methods of production, and this difference concerns mainly the efficiency or progressiveness of a particular technology. In other words, in the system under consideration there are producers for whom production costs, both average and marginal, are below the industry average, just as there are producers for whom these indicators exceed the average. This phenomenon is typical for a competitive market. Therefore, a real and objective basis is created for the concentration of production, that is, the merger of capital and its concentration in the ownership of a relatively small number of entrepreneurs.

So, in a competitive environment there are processes directed against this competition itself or, at least, limiting it. Instability is manifested in the fact that in a market environment, each individual manufacturer strives to capture and secure a large market share for a given type of product. This leads not only to increased profits, but also provides conditions for survival in a competitive environment. Hence, the elimination of competitors is seen as normal phenomenon, consistent with the principles of survival of the fittest, if, of course, such elimination is carried out within the framework of the law. And the law, as you know, does not prohibit various types of mergers and acquisitions, that is, concentration of production. Moreover, both economic theory and the practice of functioning of large enterprises support an increase in the scale of production. In this case, the so-called effect of scale is at work, noted by A. Smith and which was completed in the creation of industrial giants of the 20th century, typical both for our country and for most developed capitalist countries.

The concentration of production that began in the depths of ideal market competition is developing like a snowball. For a large enterprise, it becomes possible to organize it more efficiently, based on the division of labor, the creation of continuous production, technological and design specialization, the introduction of more powerful and productive machines, also specialized in individual operations. Naturally, there are quite a lot of components of the scale effect and their detailed analysis is not required for this dissertation research. The important thing is that a large enterprise is more competitive and has greater opportunities for further growth than ordinary medium and small enterprises. Hence the instability of ideal market competition, the constant slide towards concentration of production and movement towards monopolization.

Of course, for different industries or for different products, the noted trends manifest themselves differently. It is difficult to imagine, for example, a monopoly in the production of agricultural products. However, it seems quite natural in mechanical engineering, especially in heavy engineering. The same can be noted for the extractive industries, chemistry, etc.

Let us emphasize once again that competition was considered from the very beginning as a necessary factor in the development of productive forces. It is natural that public policy was aimed at preserving this factor, especially since by the end of the 19th century monopolistic tendencies appeared with such intensity that scientific economic thought began to consider them as natural phenomena and the split in ideas became quite clear and acute. On the one hand, the concentration of production was considered as the imperial nature of the development of capitalism, and hence the objective need for the socialization of the means of production was substantiated (Marxist-Leninist theory); on the other hand, against the background of this theory, there were persistent calls to preserve the market economy with its necessary attribute of competition. The ideologist of the latter trend should be considered Vilfredo Pareto, who specifically identified competition as an independent category scientific research. Being a supporter of the market, he viewed it from ideal positions, that is, as a market of pure competition, when there are a large number of independent sellers and buyers, with freedom of access and exit from the market. It is under these conditions that creative energy is preserved, stimulated by personal interest and personal gain. Therefore, competition acts as one of the main regulatory elements in the economy. The more intense the competition, the better for the consumer. Hence the basic principle known as the Pareto principle: all members of society benefit only if an individual acting in the market, while extracting utility for himself, does not reduce the utility obtained by other market participants. In other words, a society becomes richer if all its members benefit, and wealth will not reach its maximum if the utility gained by some groups of people reduces it for others.

This split in ideas was also realized in the political split of the world, which designated two forms of development of the productive forces: centrally planned and traditional market. As they divided across countries, attitudes toward competition also divided. For our country, for more than 70 years, the absence of competition was seen as a blessing provided by the proletarian revolution. As for market states, they had to decide more complex tasks, both at the state, that is, practical level, and in the field of economic theory. In the latter, competition, following Pareto, became the object of detailed analysis and study. The main contributions to the theory of competition and various competitive markets were made by A. Cournot, E. Chamberlin, J. Robinson, J. Hicks, P. Samuelson and others. To date, the data theoretical principles can be considered completed. The theory of a competitive market includes a classification of markets according to types of competition and an analysis of the functioning mechanisms inherent in each of these types.

The most common types of markets and their characteristics are presented below.

Table 1

Types of markets and their main characteristics

Market type	Number of market entities		Product Uniformity	Substitutability of goods	Interchangeability of market entities	Entry and exit to the market	Subjects' shares in the market
	sellers	buyers
Perfect competition	Many	Many	Homogeneous	Full	No	Free	Equal and small
Monopolistic competition	Limited	Many	Differentiated	High degree	Minor	Limited	Dominant enterprise and outsider enterprises with small market shares
Oligopoly	Some	Many	Homogeneous or differentiated	High degree	Significant	Limited	Large, approximately equal
Monopoly	One	Many	Homogeneous	No	No	Blocked	100%
Monopsony	Many	One	Slightly differentiated or homogeneous	Minor	No	Blocked	100%

Market models and the ability to influence the formation of prices for them by sellers and buyers are illustrated in the figure.

As can be seen from the figure, the opportunities of buyers and sellers are equal only under pure competition. In all other types of markets, the influence of sellers is greater than the influence of buyers, reaching a minimum with a pure monopoly.

First of all, we note that markets with perfect competition, at least in pure form does not exist.

Rice. 1. The possibility of influence of sellers and buyers on the formation of prices in various market models

However, classification analysis includes this market structure primarily because it provides insight into the nature of other market structures. So, at the moment, economic theory considers following forms competition and their corresponding market structures, each of which is assessed on the basis of certain characteristics.

Market of perfect (pure) competition

The main features that define this market are the following: many firms classified as small and producing homogeneous (homogeneous) goods; complete absence of barriers to entry into the market; no restrictions on inter-industry capital flows; full information, that is, perfect knowledge of the market by consumers and producers; lack of price control on the part of producers and consumers.

Imperfectly competitive market

The market of imperfect competition is a truly real market, the structure of which has developed at the moment as a result of technical progress and those large-scale effects discussed above. However, not perfect competition accepts various shapes. In the most general case there are three of them:

a) MONOPOLY (pure). Production is concentrated in only one firm or corporation, which produces this type products. Naturally, the manufacturer has a very high degree of control over product prices;

b) DUOPOLY. The production of a given and homogeneous type of product is concentrated in two companies. Each manufacturer is limited in its ability to control prices (partial control over them);

c) OLIGOPOLY. This is a relatively small number of firms, and the ability to control prices is more limited than in a duopoly; firms (corporations) produce homogeneous products (slight differentiation is possible);

d)MONOPOLY COMPETITION. Characterized by many manufacturers producing differentiated products, but homogeneous functional purpose, and such differentiation can be either imaginary or real; price controls are very weak.

From the above it is clear that there are two poles of market structures. The first of them characterizes the ideal dream of V. Pareto, that is, a market of perfect competition. The second is a pure monopoly. Both of these poles should be considered as very conditional, in the sense that real markets are located either closer to one pole or closer to the other. In fact, it is very difficult to recognize the existence of a pure monopoly, for at least two reasons: firstly, for monopoly products it is always, or almost always, possible to find a substitute or a substitute product, and secondly, in conditions of open international trade, instead of a national product, you can purchase a similar or similar foreign product. On the other hand, it is difficult to imagine a market structure corresponding to pure competition. It is believed that agricultural products more precisely the market agricultural products meet the requirements of perfect competition. In many ways this is true. However, with limited land plots, it is not easy to meet the requirements for free entry into the market. In addition, agricultural producers themselves usually do not directly enter the market, that is, into the sphere of circulation, but work either under contracts or on exchange orders.

In this regard, it is worth highlighting the situation of the so-called natural monopolies. Strictly speaking, this is indeed a pure monopoly, but this is not due to artificial barriers to entry into the industry, but to reasons related to efficiency, when the activities of one company are clearly more effective than the presence of many competing organizations. In other words, we're talking about about economies of scale. There are many examples of natural monopoly: local provision of electricity, gas, telephone services.

Experts in competition theory note, in general, the limited possibilities for producers to set prices for their products. This is important because even for imperfect competition the market environment is quite efficient. But it should be remembered that competition is a process that goes back to the distant past, a process that is poorly or well regulated in traditional market states, and the presence of barriers makes it possible to maintain production capacity at a level that ensures the satisfaction of effective demand as consumer goods and industrial consumption goods. The current situation in our country is fundamentally different from traditional market countries.

2. CHARACTERISTICS OF DIFFERENT TYPES OF COMPETITIVE ENVIRONMENT

Competition is necessary element market mechanism. However, the nature of competition can be different, which significantly affects the way market equilibrium is achieved.

The market mechanism operates most effectively under conditions
free or perfect competition , that is, when the market situation is characterized by a multitude of buyers and sellers, homogeneity of products sold, and free access of firms to the market. In perfect competition, no one seller or buyer on his own is able to influence the market price.

Strictly speaking, perfect competition has never existed in its pure form anywhere. It can be considered as a kind of scientific abstraction, the analysis of which is nevertheless necessary as the first step to understand the principles of the functioning of the market mechanism. Regardless of the type of market structures, a necessary condition for them is normal functioning is economic freedom, independence, independence of subjects of economic relations.

There is always a certain relationship between the market price of a product and the quantity of it for which there is demand: the higher the price, the smaller the number of those who agree to buy this product, i.e., the lower the level of demand (at a given level of income); and vice versa, the lower the price, the greater will be the number of buyers and the quantity of goods purchased.

Let us depict this relationship between price and quantity demanded graphically. If we denote on the abscissa the quantity of goods Q purchased on the market, and on the ordinate — price movement P, then the following result will be obtained.

Curve D in is called
demand curve . By projecting prices onto it, you can determine how the quantity demanded will change when the price changes.

The resulting curve illustrates the law of gradual decrease in demand, which can be formulated as follows: If the price of a good rises (all other conditions remaining constant), then less of that good will be demanded. The same relationship can be formulated differently: if a larger quantity of a product enters the market, then, other things being equal, it can be sold at a lower price.

Rice. 2. Demand curve

If we now consider the market situation from the sellers’ side or from the supply side, we will notice the opposite picture. All sellers will strive to get the highest price on the market, and the higher the price, the more actively they will try to sell more goods, i.e., increase supply.

In other words, for each seller the volume of supply will vary depending on the price: the higher the price, the higher, other things being equal, the higher the size of supply in the market of this product.

Each product has its own supply and demand curves. However, it would be wrong to imagine them as once and for all data. Under the influence of a number of factors, supply and demand curves can shift. In this regard, it is important to distinguish
the quantity of demand and the demand itself. When the price decreases, the quantity demanded increases
demand as an expression of the need for a given product remains unchanged. We can talk about an increase in demand if at each price (both high and low) buyers will purchase more of a given product.

In addition, it should be noted that the amount of demand, in addition to price, is influenced by the level of income, market size, price and utility of other goods, especially substitute goods (substitutes), subjective tastes and preferences, fashion, etc.

The main factor affecting supply is production costs.
Therefore, if, as a result of using the achievements of technological progress or in relation to agriculture, due to favorable weather conditions it is possible to reduce production costs, the supply curve shifts down to the right.

It is important to emphasize that at the equilibrium price, equality is not established between purchases and sales - such equality exists at any price. At the equilibrium price, the quantity of output within which consumers
intend
continue to make purchases will correspond to the quantity of products that manufacturers
intend
continue to supply the market. Only at such a price will there be no tendency for the price to increase or decrease.

Thus, competition and fluctuations in supply and demand led to the establishment of equilibrium in the market. The limited amount of a given product available in society is distributed among its possible consumers. But this is only partial
equilibrium in a single market. It must be taken into account that prices on the market are in constant flux due to changes in the supply or demand of goods. These changes are not independent from each other, but on the contrary, they are all interconnected. Every change in the price of one good leads to changes in the price of other goods. Exists the whole system prices, which may be in equilibrium if we consider it at a certain moment and at the same time in its totality. In this case, we talk about general market equilibrium.

At the equilibrium point, the economic
the movement stops. In order for it to start again, they must change external conditions- price level, technology, expectations and preferences of producers or consumers.

In conditions of perfect competition, at any prevailing price level, there is a kind of “external limit” at which producers either enter a given industry or are pushed out of it. An increase in prices causes the emergence of new firms and the retention of old ones. A decrease in price leads to the fact that high-cost firms become unprofitable and must leave the industry.

The extent to which the volume of demand in the market increases with a given price decrease or decreases with a given price increase characterizes the degree of elasticity of demand depending on price. The elasticity coefficient shows by what percentage the amount of demand for a product changes as a result of a change in its price by 1%. Elasticity of supply is a measure of the relative change in the quantity supplied of a good in accordance with the relative change in the competitive price. The elasticity of supply depends on many factors: differentiation of individual costs, degree of loading production capacity, the availability of free labor, the speed of capital flow from one industry to another, etc.

Of course, equality of supply and demand is theoretical abstraction, because in real economic practice such a coincidence is very rare. However, it is precisely this abstraction that allows us to identify the most important patterns of functioning of the market mechanism.

Pure monopoly. With this form of market organization, there is a single seller of a particular product. The supply of an enterprise occupying a monopoly position is opposed in the market by the aggregate demand of all buyers of a product within the geographical and product boundaries of the corresponding market (world, national, local). If, under conditions of free competition, any seller could sell a certain amount of goods at a market price independent of him, then a monopoly enterprise regulates both the volume of products sold and its price. Possessing absolute market power, it can vary the volume of products it produces, its price, and other essential conditions of sale.

An enterprise can produce either one type of product or many of its types, but in any case it will be considered to occupy a monopoly position only for that type of product for which there are completely no competing manufacturers.

One of the reasons for the emergence and existence of a monopoly is the relationship between the size of the market (demand) and the effective capacity of the enterprise, which requires the existence of several or a single manufacturer (for example, automotive industry, power engineering, etc.), in contrast to product markets, the production scale effect of which is not clearly expressed (for example, the production of bakery products, etc.). Other reasons may be natural (the only source of raw materials), technological (exploitation of the invention without transferring rights to use it for a certain time), etc.

A monopoly is possible only when it is unprofitable or impossible for other enterprises to enter the market. If other enterprises enter the market, the monopoly disappears. Therefore, the presence of entry barriers is prerequisite the emergence and existence of a monopoly.

Inherent in the nature of monopolies is the desire to use their market power to the detriment of consumers and potential competitors. Consequently, only by reducing the number of markets with a monopoly structure and reducing the number of enterprises with a monopoly position can their negative impacts on markets be reduced to a reasonable extent. In the case of the opposite situation, when it is not the seller, but the buyer, who occupies a monopoly position and is opposed by many sellers, there is monopsony, but even then the main characteristics of the market repeat the features of the monopoly type.

Among markets with a monopoly structure, a special position is occupied by the so-called natural monopolies. Due to significant economies of scale of production and the technological inexpediency of developing competition in the market, there can be only one business entity that satisfies the demand of the clientele and makes a profit. It is not advisable to disperse production across several enterprises, as this will lead to an unjustified increase in costs. Natural monopoly markets have all the basic characteristics of a monopoly type market. However, the ways in which the state influences these markets (primarily setting prices and tariffs) will be different from those that are appropriate in relation to other monopoly enterprises.

Oligopoly. With such a market organization, there is a small number of relatively large enterprises selling homogeneous or slightly different products. The few sellers in this market are opposed by a significant number of buyers.

In monopoly markets there are no types of competition. If a potential competitor overcomes barriers to entry into the market, then the monopoly enterprise loses absolute market power, the market structure changes and the monopoly disappears.

A distinctive feature of oligopoly is the wide variety in the behavior of sellers: from intense rivalry to collusion. An enterprise operating in an oligopolistic market is forced to take into account the fact that the ratio it chooses between the price and the quantity of products it can sell at this price depends on the behavior of its competitors, and their strategy is a consequence of the decision it makes.

Although it has some market power, an oligopoly cannot set prices as easily as a monopoly. The behavior of participants in an oligopoly market can be compared to a game where each move of one player is followed by a counter move by the opponent, so that the outcome of the game is ultimately unknown.

Since the reaction of competing market entities to each other’s behavior can be different, there is no universal, dynamically stable model of an oligopoly market, which leads to the ambiguity of its main characteristics: the products of this market can be homogeneous (standardized) and relatively differentiated, the possibility of entering the market can vary from almost free to severely limited.

Monopolistic competition. The name and model of this type of market arose after the publication of the book of the same name by E. Chamberlin in 1927. However, over time, the author himself, who considered oligopoly and monopolistic competition as two different types of markets, came to the conclusion that all types of markets located between perfect competition and monopoly contain elements of both and therefore can be combined into a wide class of markets of monopolistic competition. The main feature of a monopolistic competition market is product differentiation. Market participants, as in perfect competition, are numerous, and each of them occupies a small market share, but they have some market power due to product differentiation and segmentation of the corresponding product market.

Monopolistic competition is similar to perfect competition by such features as a multitude of sellers and buyers, significant freedom of entry into the market, and is distinguished by heterogeneity and differentiation of products.

Unlike an oligopolistic market, enterprises in a monopolistic competition market are not interdependent if their market shares are comparable in size. Their behavior in the market is closer to the behavior of perfectly competitive enterprises than to the behavior of an oligopoly type. Product customization entitles businesses in such markets to exercise a certain degree of market power in setting prices.

There is another model of monopolistic competition, when there are one or two enterprises in the market that occupy a dominant position, and a significant number of outsider enterprises with a small market share. In this case, the system of relations “dominant enterprise - outsiders” will be characterized by a model approaching monopoly market, and for competition between outsiders - the model of perfect competition or the first type of monopolistic competition.

The latter largely depends on the nature of the product - the degree to which it is standardized or, on the contrary, the possibility of individualization (compare: coal and cellulose or confectionery).

A very significant determinant of market power in conditions of monopolistic competition is not the pricing policy of other sellers, but the degree of commitment of buyers to a particular brand of product. An indicator of market power is price elasticity demand for the company's goods. All other things being equal, the elasticity of demand is lower (correspondingly, the market power of the seller is higher), the greater the confidence of buyers in the uniqueness and significance of the consumer properties of the product.

Consequently, in markets of monopolistic competition, it is the uniqueness of the combination of consumer properties in the eyes of buyers that is the main factor in the competitiveness of a product. Price competition fades into the background, giving way to non-price competition, which uses tools such as advertising campaigns, service competition, warranty and post-warranty service, assortment competition (which is especially important for trade enterprises, public catering, mass services, etc.), location, etc. d.

CONCLUSION

Thus, we can conclude that competition is a struggle between commodity producers, between suppliers of goods (sellers) for leadership, for primacy in the market, for the consumer’s “wallet”. Competition involves the struggle of commodity producers and suppliers for the most favorable production conditions, areas of capital investment, sources of raw materials, and sales markets. Competition is the “invisible hand” that regulates the entire social economy. Competition is one of the most important ways to increase the efficiency of both the entire economic system and all its links. Competition is a civilized form of the struggle for survival; it is the strongest way to continuously stimulate workers and labor collectives. Thanks to economic freedom and the competition that accompanies it, a market economy is superior to a command economy, in which there is no place for competition.

Positive aspects of competition: competition forces us to constantly look for and use new opportunities in production; competition requires improving equipment and technology; competition stimulates improvement in product quality; competition forces costs (and prices) to decrease; competition requires suppliers of goods (sellers) to reduce prices for the goods offered; competition focuses on the range of goods in high demand; competition improves product quality (the customer is always right); competition introduces new forms of management.

Negative aspects of competition: when competing, there is ruthlessness and cruelty towards the loser; a large number of “victims” in the form of bankruptcies and unemployment.

Market relations have a constant influence on the development of production through supply and demand. However, this influence is not limited to the role of price and pricing. Market models have a huge impact on the production, distribution, and exchange of material goods in society. REFERENCES MAIN TYPES AND REASONS FOR THE EXISTENCE OF IMPERFECT COMPETITION COMPETITION AS AN ECONOMIC CATEGORY

2015-02-03

The market is a competitive environment, which is based on the competition of producers for the sale of their goods. Five elements of the competitive environment can be distinguished. The first one is commodity market. This is the sphere of circulation of goods that have no substitutes in Russia. It is determined on the basis of the economic ability of a potential buyer to purchase products in a certain territory and the absence of such an opportunity outside its borders. At the same time, they are an element of the commodity market.

Product boundaries of the market are the second element and consumer properties of products. In addition, the formation of a product group plays an important role when its markets are considered one product category.

The third element is the geographical boundaries of the market, that is, the territory where buyers purchase the necessary goods. In this case, they do not have the opportunity to buy it outside of this territory.

Competition is the fourth element of the market, which can be described as the competition of economic entities when their own actions do not allow them to fully unilaterally influence the conditions of commodity circulation in the market.

The competitiveness of the product and the product itself are two more elements of the market. Competitiveness is the level of technical, economic and other parameters of a product, thanks to which it is able to withstand competition with similar products. The main object of the market is products that have cost and value, and also have reliability and a decent technical level.

Competitiveness indicators

Six main indicators of an enterprise’s competitiveness allow it to maintain its economic and social status at the proper level: technical and price indicators, product quality, terms of delivery and payments, features of the customs and tax system, as well as the degree of responsibility of sellers. As you can see, these factors make it possible to make market conditions more efficient.

Types of competition

Since the market is a very broad area, competition must be divided into several types. One of them is pure competition, which is formed by many buyers and sellers of similar goods. In this case, there is no specific buyer or seller who can have a decisive influence on the price level of the product.

Monopolistic competition is the second type. It consists of many buyers and sellers who transact over a wide price range. This opportunity exists due to the ability to offer different products to customers.

Oligopolistic competition is a small number of price-sensitive sellers. Thus, the market as a competitive environment is a vast area that provides a decent standard of living.

Modern enterprises are in a constant search to counteract competitors and adapt to environmental conditions. One of the distinctive features of the world economy is that the economic relationships of its subjects find themselves in competition, which is inherent in the market economic system.

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

The incentive that motivates a person to compete is the desire to surpass others. Competition is a dynamic process that accelerates its movement. It helps to better supply the market with goods. 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 area of ​​investment of capital.

Competition(Latin: Concurrere - to collide) means competition between individual subjects of a 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 subjects;

Complete economic isolation of each of them;

Dependence of market entities on market conditions;

Confrontation with all other market entities to satisfy consumer demand.

The competitive struggle for economic prosperity and survival is the economic law of a market economy. This 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 at a lower price to stimulate consumer demand. Sometimes used on the market dumping(English Dumping - dumping, artificially reducing prices for goods in foreign markets to conquer them, eliminate competitors) - selling goods at extremely low (so-called junk) prices.

Competition is the engine of economic progress, since market competition 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 technology and organization of labor, improves the quality of goods, reduces the cost of producing a unit of product and thereby has the opportunity to reduce prices, expands the range of goods, improves sales and services to customers.

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

Modern economics 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 19th century, which was characterized by the dominance of free competition;

II) since the 70s of the XIX century. to the C-40s of the XX century, 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 government restrictions on monopoly and stimulation of competitive relations. It comes in two forms - monopolistic competition and oligopolies. Free competition has the following features:

Mobility (mobility) of production resources within the market;

Free entry into and exit from the market;

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

Uniformity (standardization) of the manufactured product;

Availability and completeness of information on prices.

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

The product is produced by a very large number of independent enterprises, so the share of each company in the total production volume of the industry is extremely limited;

The amount of capital used by an individual enterprise is so small that not a single firm has the ability to significantly influence the volume of supply of goods;

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

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 react to the appearance or disappearance of another seller of the product);

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

Associated with this form of competition is the concept of effective competition, where buyers and sellers act independently, even though the market is not purely or completely competitive.

During the period of dominance 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 product. Inter-industry competition- this is a struggle for profitable areas of investment of capital, its mechanism lies in the free movement of capital from less profitable to more profitable sectors. The result is the formation of an equilibrium (average) rate of profit, that is, equal capital receives equal profit, regardless of the industry of its application.

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

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

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

The impossibility of direct intervention in the pricing mechanism forces firms (to increase income) to maximize production volumes and stimulates the full and rational use of all types 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, a monopoly is a force that undermines free competition and 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 of market power; firms in perfectly competitive industries have no market power.

A monopolist firm acquires an exclusive position in the industry market, due to which it sets monopoly 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, preventing competitors from accessing 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 dominance of monopolistic structures:

The region is dominated by one giant firm;

She produces a unique product;

Entry to the industry is completely blocked;

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

exclusivity economic situation one entity exercising market power.

Based on different reasons for its occurrence, monopoly can be reduced to three main forms: natural, administrative and economic.

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

Administrative monopoly arises due to the fact that the state (government or local authorities) creates exceptional 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 ability to influence pricing. By achieving favorable prices, such enterprises begin to receive monopoly profits.

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

Clarification 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 of 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 mostly medium-sized firms operating in the industry market, competing with each other;

Competitors produce a differentiated product (a product of the same type, but with certain, unique features), each of the firms has a monopoly right to produce its own special product;

New competitors with their own differentiated products penetrate the market quite easily;

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

Price control exists within very narrow limits (the price of its own differentiated product).

Monopolistic competition markets are most common in modern market economies. This type of market structure covers the production of clothing and footwear, cosmetics, electrical appliances, medicines, personal computers, stationery, confectionery and sweets, fabrics, retail trade, enterprises food industry, 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 (different in quality, convenience, aesthetics) products;

There are significant barriers to another competitor entering the industry, primarily due to large sizes capital;

Control over price is limited or limited (in case of collusion between competitors on price levels, sales markets, etc.);

The small number of firms in an oligopolistic market forces the widespread use of non-price methods of competition.

In conditions of approximately identical financial and technological resources, the vast majority of competing large corporations refuses to use price methods of influencing a rival, because, firstly, it is very expensive, because every manufacturer understands that when he decides to reduce the price of his product, a competitor will do the same (from such a price maneuver when competitors know everything about a friend, there can only be loss of income); secondly, it practically does not change the market position. It is more economically profitable to use non-price competition. Since the mid-50s - the period of deployment of scientific and technological revolution - the most important methods maintaining intra-industry competition is the renewal of goods and timely entry into the market; improving the range and quality of products; improving forms of attracting and servicing customers, using methods of price discrimination.

Price discrimination- simultaneous sale of identical goods various categories buyers at different prices, when the difference in prices is not justified by production costs; pricing practices are declared criminal (for example, under the Clayton Act in the USA) if they restrict competition. Eat different ways differentiation by firms of buyers into those who can pay more and those who can only buy at low prices. Potential clients of a company with a more elastic demand for a product are an object for applying discounts, and a client with a less elastic demand is an object for applying price discrimination.

Most characteristic feature The oligopolistic model, which 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 back in the 30s of the 19th 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 strive to sell the quantity of products that maximizes its income.

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

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

If in a market of monopolistic competition there are no special obstacles to the implementation of inter-industry competition, then in an oligopolistic market its restrictions are very significant. Therefore, new methods of inter-industry competition are used: production diversification, 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 their 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 the initial stages to its sale. Conglomeration is the combination of capital from unrelated industries in one huge company.

All this leads to the emergence of huge diversified firms operating primarily in various oligopolistic markets. Here, inter-industry competition is carried out, as a rule, through internal corporate capital movements.

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 raises the upper limit of industry profitability);

Economic opportunities and bargaining power of suppliers (the ability of suppliers to dictate their terms)

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

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

In M. Porter's model, the importance and strength of influence of each competitive factor changes from market to market, determining prices, costs, investment in production, product sales and business profitability. Suppliers and buyers, trying to take advantage of a situation favorable to them, reduce the company's profits. Competition within the industry also reduces profits because to maintain competitive advantages you have to increase costs (for advertising, sales organization, etc.) or lose profits by lowering prices. The availability of substitute goods reduces demand and limits the price a firm can charge for its product.

When developing strategies, enterprises are required to take into account substitutes, which is a force that determines the enterprise's pricing policy, product renewal policy, 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 30s and 60s of the 20th 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 the need arose to overcome the monopolistic market structure .

Summarizing the consideration various models market, we can conclude that in modern conditions the most widespread types of market structure are: monopolistic competition and oligopoly. That is, the modern competitive model is a type of so-called reasonable competition (in the words of P. Samuelson). Large firms have always strived and will strive for a monopolistic position in the market. Therefore, the effective functioning of a modern market system necessarily presupposes conscious government regulation and stimulation of “conscious,” reasonable competition.

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