A natural monopoly is the industry that provides it. Natural monopoly

On modern stage economic development is the concept of “natural monopoly” - as an exclusive right granted by the state to an enterprise, organization or individual to carry out any activity.

Government commissions retain the right to regulate the actions of such monopolies and determine prices (tariffs) for their products. In view of containing the rise in prices for certain goods and services of natural monopolies, the state is forced, if necessary, to provide subsidies to producers that allow them to cover losses.

Natural monopolies can be commercial and non-profit organizations engaged in the production or sale of goods or services. A natural monopoly arises and exists for objective reasons in industries where only large-scale production can exist, helping to reduce costs, increase efficiency, and reduce prices (energy, water supply, gas supply, urban metro, communications, etc.).

These organizations, using technological features of production, can produce goods or services that do not have given time substitutes and, as a result, have stable demand with a slight change in price.

At the same time, a natural monopoly is characteristic of the extraction of rare minerals or the production of certain goods in particularly favorable areas. natural conditions(mineral type, special varieties of tea, grapes, etc.). The government retains the right to regulate the actions of such monopolies; prices (tariffs) for the products of natural monopolies are determined by government regulatory commissions. The state pursues a policy of containing prices for certain goods and services produced by natural monopolies. To cover possible losses for producers, the state provides them with the necessary subsidies. Creating a competitive environment in the market, regardless of the level of demand, under conditions of a natural monopoly is impossible or economically ineffective at the current level of development of science and technology.

In a pure monopoly, the industry consists of one firm (the glucose plant). At first glance, such a situation is unrealistic and, indeed, occurs quite rarely on a national scale. However, if we take a more modest scale, for example Small town, then we will see that the situation of a pure monopoly is quite typical. In such a city there is one power plant, one railroad, one airport, one bank, one large enterprise, one bookstore, etc.

A pure monopoly usually arises where there are no real alternatives, no close substitutes, and the product produced is to a certain extent unique. This can be fully attributed to natural monopolies, when an increase in the number of firms in an industry causes an increase in average costs. A typical example of a natural monopoly is municipal utilities. Under these conditions, the monopolist has real power over the product, controls the price to a certain extent and can influence it by changing the quantity of the product.

A monopoly occurs where barriers to entry into an industry are high. This may be due to economies of scale (as in the automobile and steel industries), natural monopoly(when any companies: in the field of mail, communications, gas and water supply - consolidate their monopoly position by receiving privileges from the government).

A monopoly may be based on an exclusive right to a resource, for example, natural factors of production.

A firm can be called a pure monopolist if it is the only producer of an economic good that has no close substitutes (substitutes), and is protected from direct competition by high barriers to entry into the industry.

A monopoly in economics is an industry in which, for some reason, there is no competition. It may be limited by law through a legal act or a patent, or there may be no competition in a new industry in which only one manufacturer operates.

However, there is absolutely special kind: a natural monopoly is an industry that needs maximum amount consumers and which uses unique Natural resources. If an ordinary monopoly limits the creation of a free market, then a natural one is the most profitable option for the existence of this industry.

Types of monopolies: schematically

Speaking in the language of economic science, a natural monopoly is a state of the market when its maximum efficiency is possible only in the complete absence of competition. which are produced in these industries cannot be replaced by any analogues, and the demand for them is maximally inelastic.

Even if the price for the products of natural monopolies is significantly increased, demand will remain the same, and buyers will begin to save on purchasing goods from other groups. A natural monopoly in an industry is possible only if the costs of producing goods by one firm are lower than if two organizations were engaged in this business. If the number of producers increases, the volume of production for each of them will become less, and costs will only increase.

In Russia, as in other countries, today there are several industries in which a situation of natural monopoly has formed:

• Transportation of oil and petroleum products, as well as natural gas through main pipelines. The operation of such a transport network will be most efficient and profitable if only one company is involved in this.
• Rail transportation. An example of a natural monopoly in Russia is the Russian company railways"is the only enterprise engaged in rail transportation; it also owns the entire transport network throughout Russia.
• Electricity and heat transportation services. Similarly, in this industry, no organization can become a serious competitor to monopolists.
• Operation of transport terminals: airports, sea and river ports, etc.
• Urban water supply services, ensuring the operation of utility networks. Purpose of payment for public utilities is under constant state control, tariffs are formed taking into account a number of factors. At the same time, the end consumer has no alternative; he has to pay for water supply, sewerage, heat supply and other services at the prescribed tariffs, and he cannot switch to another supplier.
• . In Russia natural monopolist in the field of postal services and correspondence forwarding is the Federal State Unitary Enterprise "Russian Post". Although there are several regional operators operating in the country, their share in the total number of services provided has been less than 1% for more than 10 years, and no changes are expected in the near future.

All of the listed industries are exclusive and are not subject to antitrust laws. This is due to the fact that they are designed to protect the industry from low-quality competition, and in all cases their activities are regulated and controlled by the state.

The main signs of monopoly in economics

Natural monopoly goods are irreplaceable

Any monopoly in the economy has a number of specific features that distinguish it from all types of competition and explain its special position in the market. A monopoly can be natural or artificial, but in any case it must meet several special criteria:

• The existence of only one company supplying goods or services to the market. This company can be formed through large investments of capital over a long period of time, such as the railway network in Russia. Naturally, none new organization will not be able to invest as much to become a stronger monopolist and quickly cover all costs.
• The product or service is so specific that there are no analogues for it. The consumer can only agree to the conditions set by the monopolist or even refuse the good he offers. A monopolist has the ability to set its own price.
• In a competitive environment, the price is formed by matching supply and demand, so it changes quickly. A monopolist company can dictate its terms at any time; in natural monopolies, the state plays a large role in pricing. The monopolist itself controls the entire volume of services or goods provided in a given industry. That is, he forms not only the price, but also the supply, adjusting their ratio at his discretion.

Reasons for the formation of artificial and natural monopoly

The concept of natural monopoly appeared in ancient times

This form of industry organization, such as a monopoly, has existed for a very long time; the term itself appeared in ancient times. The very first organizations arose as a result of the combined efforts of several manufacturers, who captured the entire market and could independently set prices at their own discretion.

Almost all civilized countries today have antimonopoly legislation that regulates the market situation and prevents one company from taking over an entire industry. However, it is necessary to distinguish artificial monopoly, which is the result of an agreement between manufacturers and an association of companies, and natural, arising for objective reasons.

Not only will it not hinder the development of the economy, but it is also more profitable and effective form existence. The situation of natural monopoly is formed for several reasons:

• One firm produces a product or service at a lower average cost due to increased production volumes. This allows you to reduce the price by final product, and for the end consumer this situation turns out to be much more profitable. An example is the city subway system or railways: if two carriers operate in the same direction, the income of each of them will be half as low, and because of this, the fare will have to be doubled.
• The difficulty of entering the market for a new enterprise with a similar offer. For example, in order to introduce another enterprise involved in water supply to the city, it will be necessary to lay an additional water supply network. This is not only extremely costly, but also useless, since the profit received will not recoup the investment even in the distant future.
• Limited market demand. Some suppliers' products are so specific that one manufacturer is more than enough for it. If there are more of them, the total profit will remain the same. An example is production military equipment or nuclear icebreakers: the demand for such products completely depends on the state, and in this industry larger number producers simply won't survive.
• A natural monopoly is as stable as possible: if an artificial monopoly association can eventually break up into several competing firms, then the industry of a natural monopoly will remain unchanged for a very long time. A turning point in its work can only occur with the emergence of new technological solutions or sudden change market demand.

An example of how a natural monopoly works

Natural monopoly is protected by the state

Let's consider the operating principle of the Russian Railways company, one of the largest monopolistic organizations in Russia. Today it is the only seller that provides the opportunity to transport goods and passengers by rail.

Even if another company acquires its own locomotives, it will be forced to use the existing transport network and coordinate its every action with Russian Railways.

The organization itself includes numerous subsidiaries, making it completely independent. These are their own design institutes, repair plants, trade organizations and much more that should ensure the life of a giant company. Due to the huge scale of competition in this industry there is no and is not expected.

At the same time, the uniqueness of the services offered today remains controversial, since in addition to rail, you can use road, air and water transport. However, rail transportation is the most reliable and safest, in addition, it makes it possible to transport large consignments of goods, which means they also have no real alternative. Other companies are barred from entering this market due to the enormous costs of building their own transport network.

The monopoly position is protected by the state, which is the sole shareholder of the company and has complete control over its management.

The Russian Railways organization independently sets prices, and they depend little on fluctuations in demand. Based on all these signs, we can confidently say that the Russian Railways company is a natural monopolist in its field, and this moment This is the most profitable option for the consumer in this industry.

A natural monopoly is a market position that does not impede the development of the industry, but, on the contrary, makes it more profitable and efficient. The existence of such monopolies depends on a number of factors, and their emergence is due to natural objective reasons.

Natural monopolies: Nationalize cannot be privatized - topic of the video:

NATURAL MONOPOLY, special market structure, in which it is economically feasible to have a single enterprise providing the entire market with a specific product (service); pure monopoly, in which the minimum efficient production size is greater than the existing demand for its products. For example, gas transportation through pipelines can be called a natural monopoly; services for the transmission of electrical and thermal energy; rail transportation; services of transport terminals, ports, airports; public electric postal services.

A natural monopoly is characterized by: strong vertical integration; inelasticity of demand for goods (services) in the absence of substitute goods; high barriers to entry into the industry and high sunk costs; long term return on investment; physical environmental restrictions limiting the number of companies in one territory.

Strong vertical integration is due to the fact that a natural monopoly ensures the functioning of an entire industry. For example, JSC Russian Railways (JSC Russian Railways) includes not only a dense network of railways, but also stations, marshalling yards, rolling stock, repair depots, transport interchanges, a ticket sales system, regulation of freight flows, etc. .

The inelasticity of demand for goods (services) in the absence of substitute goods means that in some cases it is quite difficult to find an adequate replacement for the products of a natural monopoly. For example, in a number of industries it is impossible to avoid the formation of monopolies. You cannot have two gas pipelines from two competing companies, several heat transfer lines, alternative sources electricity, etc. In most infrastructure sectors, the formation of monopolies occurs naturally, and the state is forced to carry out direct or indirect regulation in relation to them.

High barriers to entry into the industry and high sunk costs are due to the fact that it is created in short time alternative system, for example, rail transportation is impossible (railroads began to be built in Russia in 1837 and have continued to be improved since then). In addition, physical limitations of the environment often do not allow the creation of a duplicate company in the same territory.

The long payback period for investments is due to the fact that natural monopoly objects (for example, structures for the transmission of electrical and thermal energy) have been created for decades.

There are traditional and modern mechanisms for regulating natural monopoly. Traditional mechanisms include: the rate of return on capital, the rate of profit depending on the volume of output, on the volume of sales (income), on costs. However, all these methods do not help reduce costs, but, on the contrary, objectively lead to an increase in the capital costs of natural monopolies and the capital intensity of production. Therefore, in the 1970-80s, models of incentive regulation of natural monopolies were widely developed.

The goals of incentive regulation are: minimizing costs associated with the regulatory process; introduction of competition as a means of increasing efficiency; creating incentives for the regulated firm to reduce costs. Their implementation contributes to the efficient use of resources, existing capacities and interests firms in innovation. Among the models of incentive regulation, the following stand out.

Price limits. Their essence is to set a fixed ceiling on the price set by the regulated company. The purpose of this operation is to force the company to reduce costs. For example, in its activities, the American Telephone and Telegraph Company establishes three baskets of services: one for individual consumers and two for companies and businesses. In this case, the price limit is indexed in accordance with the growth rate of GNP, minus 3% (which is the average growth rate of labor productivity in the United States).

"Yardstick" competition. This method is used to regulate water supply and electricity in the UK, where similar companies are regional monopolies. As a constraint, estimates are used based on the cost levels of other firms operating in similar conditions. However, a comparability problem arises.

Profit sharing schemes. This method motivates companies to increase profit margins. However, it is beneficial for the state that the rate of profit does not exceed certain limits. Let's take the power industry of Indiana (USA) as an example; if the company's income does not exceed 10.6%, the company receives it; if the profit margin turns out to be over 12.3%, then the company must reduce prices and the benefit goes to consumers. Revenues (ranging from 10.6 to 12.3%) are divided between the company and consumers.

Tariffs are optional. The company must provide a certain set of services at regulated prices. However, it can itself offer the consumer an alternative tariff structure.

Hybrid mechanisms. They can use the previous forms in a certain combination; for example, regulation of telecommunications and gas transportation in the United States in the early 1990s. The company sets an overall income limit, indexes rates, and reviews rates based on costs. The advantage of hybrid mechanisms is greater flexibility in terms of prices.

Since the mid-1980s, liberalization of natural monopoly regulatory reform began in the United States and Canada. Privatization was carried out and measures were taken to increase competition in the UK, New Zealand and Australia. There are two fundamentally different systems in the world.

In Eastern and Western Europe gas pipelines are state-owned enterprises with a transport monopoly; they are included and integrated into the activities of the gas company. This practice exists in Italy, France, Belgium, the Netherlands, Denmark, Poland, Bulgaria and Romania.

IN North America On the contrary, main gas pipelines are the property of private or joint companies. They are managed independently of sellers and buyers, even in cases where they are owned by one or the other.

Open access to a natural monopoly (in countries such as the USA, Canada, Great Britain) stimulates competition, since it gives any third party the right to purchase transport services. The introduction of open access is possible on the basis of separating the gas pipeline into a separate transport company. In this case, it is necessary to separate two levels: separation of transport functions from the functions of a trader; separation of transportation-related services from storage, brokerage services, etc.

Transport tariff. In countries where the gas producer owns the entire vertical gas chain (including gas pipelines) and there is a dominant monopoly company (Italy, Belgium, the Netherlands, France), a separate transport tariff does not apply. On the contrary, in countries where gas monopolies have been privatized (Great Britain) or where main gas pipelines are in the hands of private or joint-stock companies (USA, Canada), the issue of transport tariffs is key. Incentive regulation (price limits, profit-sharing schemes, etc.) is also widely used.

Reforming a natural monopoly is a long and complex process. Even the most successful reform of the vertically integrated monopoly British Gas took 10 years.

In Russia, in the “Basic provisions of structural reform in the areas of natural monopolies”, approved by the Presidential Decree Russian Federation dated 28.4.1997, reinforcement provided government regulation in the field of transportation, stimulating competition in potentially competitive types economic activity and the weakening of regulation in them, the development of contractual relations between suppliers and consumers. Examples of a natural monopoly are RAO UES, Gazprom, and JSC Russian Railways.

Lit. : Temporary Regulations on the Register of Natural Monopolies Subjects Subject to State Regulation and Control, dated August 26, 2004 No. 59 // Russian newspaper. 2004. September 22; Antimonopoly regulation of vertical restrictive contracts: Russian practice in the context of world experience / Edited by S. B. Avdasheva. M., 2004.

I. ECONOMIC THEORY

15. Monopoly. Natural monopoly. Price discrimination

Monopoly is a firm-industry that produces products that have no substitutes. Therefore, a monopolist firm dictates the price of its products.

Monopoly comes in the following forms:
1) closed – protected from competition legally: by copyright, patent;
2) open– does not have special protection from competition (companies entering the market for the first time with new products);
3) natural– exploiting unique natural resources (electricity networks, water supply companies, gas enterprises).

The phenomenon of “natural monopoly” occupies a special place. Natural monopolies include public utility enterprises and enterprises that exploit unique natural resources (electric and gas enterprises, water supply companies, communication lines, transport companies). As a rule, such “natural monopolies” are owned or controlled by the state. The existence of natural monopolies is explained by a special effect associated with the scale of production - the effect of saving resources as a result of the consolidation of production. Due to better technical equipment and greater power large enterprise There is an increase in labor productivity, and hence a decrease in costs per unit of production.

This classification is very conditional: some monopolistic firms belong to several types at once.

A monopoly that sells products to all buyers at the same price is called simple.

Monopolist conducting price discrimination, sells its products to different consumers at different prices. Price discrimination is carried out:
– by purchase volume (wholesale and retail);
– buyer (by income, age). For example, selling air tickets to businessmen and tourists. For the latter, more than low price, because when going on a tourist trip, they book tickets in advance and can choose a cheaper mode of transport (demand is elastic). Businessmen have a shorter order time (usually at the last minute), so there is practically no alternative (demand is inelastic);
– different prices in the domestic and foreign markets.

By conducting conditional discrimination, the monopolist maximizes profits by capturing a larger share of the market.

Since there is only one monopolist operating in the market, the demand curves for the firm and the industry coincide (Fig. 15.1). A monopolist chooses a combination of price and volume, in contrast to a competitive firm, which chooses only the volume that will maximize profits.

A monopolist maximizes profits by producing a volume of output that marginal revenue equals marginal cost(Fig. 15.1)

Unlike a perfectly competitive market, the price of the monopolist exceeds MC

Thus P m and Q m are the profit-maximizing price and volume. If Q m were produced under perfect competition, it would be sold at P k (under conditions competitive market P=MR=MC). Since P m > P k , and P m > MR=MC, therefore, P m P k is the value of monopoly power (L). The source of monopoly power is the low price elasticity of demand

Rice. 15.1. Profit maximization by a monopoly firm

That is, the more inelastic the demand for the monopolist’s products, the more monopoly power, the greater his profit. Since the price of the monopolist is P m >P z (cost Q M), the amount of profit is characterized by the rectangle P m mzP z.

Natural monopoly– a state of a commodity market in which satisfying demand in this market is more effective in the absence of competition due to the technological features of production. Goods produced by subjects of a natural monopoly cannot be replaced in consumption by other goods. As a result, the demand for goods produced by natural monopolies is less dependent on changes in the price of this product than the demand for other types of goods.

A natural monopoly arises due to objective reasons. It reflects a situation where the demand for a given product is better degree satisfied by one or more firms. The basis of a natural monopoly is the peculiarities of production technologies and consumer services. Here competition is impossible or undesirable. For example, energy supply, telephone services, etc. There are a limited number of businesses in these industries. Therefore, naturally, they occupy a monopoly position in the market.

The main features of a natural monopoly:

1) the legal basis for the establishment, implementation and termination of the regime;

2) the relationship between the legislation on monopolies and the Law “On Competition”, their differentiation through legal regulation;

3) the boundaries of action of the monopoly regimes under consideration by industry and type of business;

4) general legal status subjects of monopolies, the specific nature of their rights and obligations;

5) system for regulating the activities of monopoly entities;

6) sanctions and liability for violation of the provisions of legislation in the relevant area.

Areas of activity of natural monopolies:

1)transportation of oil and petroleum products through main pipelines;

2) gas transportation through pipelines;

3) services for the transmission of electrical and thermal energy;

4) rail transportation;

5) services of transport terminals, ports, airports;

6) public electric and postal communication services.

The monopoly regulatory institutions under consideration are exceptional. From an economic point of view, exclusivity means the removal of certain areas of economic activity from the influence of purely market competitive mechanisms of self-regulation. The establishment of a corresponding monopoly regime means the introduction of a special situation in a separate sector of the economy, which is impossible without any economic and legal grounds. Legal grounds and principles of use legal regime monopolies should be designated specifically in a federal legal act, taking into account the restrictive functions of this institution. When preparing such acts, it should be borne in mind that a natural monopoly is due to objective economic, technological features production. The activities of natural monopolies cannot be considered as economic activity, prohibited in paragraph 2 of Art. 34 of the Constitution of the Russian Federation. After all, the functioning of a natural monopoly is not aimed at monopolization, but at eliminating unfair competition. It is carried out exclusively within the framework of government regulation market relations and for the purpose of protecting consumers.