Monopoly in a market economy presentation. Presentation on the topic "corporate associations and problems of monopolization"
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Monopoly (from the Greek mono - one, poleo - seller) is the exclusive right to carry out any type of activity (production, trade, fishing, etc.), granted to one person, a certain group of persons or the state.
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A monopoly presupposes the fulfillment of the following conditions: The monopolist is the only producer of this product; The products are unique in nature and have no close substitutes; Penetration into the industry for other firms is blocked by a number of barriers; The monopolist's influence on the market price is very high.
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Barriers to entry into a market with a monopoly: exclusive rights obtained from the government or local authorities; patents and copyrights; ownership of resources, such as sources of raw materials; advantage of low costs of large production.
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Advantages of low costs of large-scale production: ATS Q ATSk ATSm ATSk - average costs of a competitive company ATSm - average production costs of a monopolist firm 1/2Q Qm
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A closed monopoly is protected from competition through legal restrictions and prohibitions (most often it is a government monopoly). An open monopoly is a monopoly in which one firm, at least for some time, becomes the sole supplier of a product, but has no special protection from competition. A natural monopoly occurs in an industry in which long-run average costs are at a minimum only when one firm serves the entire market. An artificial monopoly is an association of enterprises created for the sake of obtaining excess profits and establishing market power.
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Features of the interaction of supply and demand in a monopoly market The monopolist has a certain power over the market, since he alone determines the supply of goods. In addition, he has power over the price of the product, but this power is not absolute, since the price also depends on demand, and supply depends on the price.
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To measure monopoly power, the Lerner coefficient is used: L=(P-MC)/P, where L is the Lerner coefficient; P – price; MC – marginal cost.
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Determining how high a monopolist's price can be is related to demand and its elasticity. Prices can be increased if the corresponding reduction in demand does not entail a drop in the monopoly's income and profits. Otherwise, in order to increase income, the monopoly is forced to increase production, which implies a certain reduction in price in accordance with the law of supply and demand. Q P D1 D2 P1 P2 Q1 Q2 Q3 Q4
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The monopoly searches for prices guided by the same rule as enterprises operating in a perfect market: 1. The volume of production and corresponding supply of goods must be such that marginal costs (MC) are equal to marginal revenue (MR): MC = MR 2. The monopolist considers MC and MR as the basis for setting the price - it should not be lower than them. However, in a monopolistic enterprise, unlike enterprises operating in conditions of perfect competition, marginal revenue is less than price (P) and, accordingly, average revenue (AR): MR< P = AR
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Features of the interaction of supply and demand in a monopoly market Q P MR MC (=S) D Q wholesale Рм ATC Pe E ATCm Qe Monopoly profit
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Problem 1. The fixed costs of the monopoly are 1,500 rubles. The dependence of the monopoly's variable costs on the volume of output is presented in the table: There is data on the volume of demand for the monopoly's products at various price levels: Determine: What volume of production will the monopoly choose and the corresponding price level; Monopoly profit. R, rub. 5000 3500 3100 2800 2600 2380 2100 Qd, pcs. 0 1 2 3 4 5 6
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Solution: Monopoly, when determining the optimal volume of production, is guided by the rule: MR=MC To solve the problem it is necessary to find MR, MC and ATS. TC=FC+VC; MC = (TCn-TCn-1)/(Qn –Qn-1); ATC= TC/Q; МR = (TRn-TRn-1)/(Qn –Qn-1); TR= P*Qd.
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We summarize the obtained data in a table: Q, pcs. FC, rub. VC, rub. TC, rub. ATS, rub. MS, rub. R, rub. Qd, pcs. TR, rub. MR, rub. 0 1 2 3 4 5 6 1500 1500 1500 1500 1500 1500 1500 0 1000 1500 2500 4500 7000 10000 1500 2500 3000 4000 6000 8500 11500 - 2500 1500 1333 1500 1700 1916 - 1000 500 1000 2000 2500 3000 5000 3500 3100 2800 2600 2380 2100 0 1 2 3 4 5 6 0 3500 6200 8400 10400 11900 12600 - 3500 2700 2200 2000 1500 700
Monopoly. Antimonopoly activity of the state Main issues: 1. The essence and types of monopoly. 2. Types and forms of monopolies. 3. Equilibrium conditions for a monopolist firm. 4. Monopoly price and monopoly profit. 5. Indicators of market concentration. 6. Sources of monopoly power. 7. Economic consequences of monopoly. 8. Antimonopoly regulation. 1
A pure monopoly is a type of market structure in which there is only one commodity producer on the market for a given product, who has the exclusive right to produce and sell it. Characteristic features The production of goods by the entire industry is controlled by only one seller of this product (who is called a monopolist) The product produced by a monopolist firm is special in its kind and does not have close, related substitutes A monopolist firm is able to independently, within certain limits, change the price of the goods sold in any direction The monopoly is completely closed to the entry of new firms into the industry Lack of free access to obtain economic information 2
A monopoly is an exclusive right to carry out any type of activity, granted only to a certain person, group of persons, or the state. Types of monopolies: closed, protected from competition through legal prohibitions and restrictions; open, in which one company, due to a combination of circumstances, has become the only manufacturer and supplier natural product, necessary due to the fact that without such a monopoly it is impossible to achieve efficient use of resources 3
A monopoly is understood as the exclusive right of someone to something. Types of monopolies: a monopoly itself is the presence in any specific market of a single producer-seller; an oligopoly is a market for a small number of producers-sellers, usually of a homogeneous product; a monopsony is a market for a single buyer; consumer of any specific product bilateral monopoly - market of a single seller and a single buyer 4
Forms of monopolies 1) monopolies associated exclusively with the process of concentration of production 2) technological oligopolies - large enterprises (associations), where the technology itself requires a fairly high level of concentration of production 3) monopolies based on product differentiation 4) monopolies associated with leadership in scientific- technical progress (NTP) 5) a vast zone of state natural monopoly 6) total (universal) dominance of the command-administrative system and almost complete nationalization of the economic life of society 5
Types of monopolies Depending on the organizational design, they distinguish: a pool (from the English pool - literally a common boiler) is a monopoly in which the profit of all participants goes to a common fund and is then distributed among them according to a predetermined proportion pool (from the English pool - lit. common pot) is a monopoly in which the profit of all participants goes into a common fund and is then distributed among them according to a predetermined proportion. or goods or shares for the purpose of subsequent speculative resale corner (from the English to corner - literally drive into a corner) - the simplest form of association of entrepreneurs for the purchase of any goods or shares for the purpose of subsequent speculative resale ring (from the English ring) - short-term an agreement between entrepreneurs aimed at making a profit by buying a product on the market and then reselling it at increased prices ring (from the English. ring) - a short-term agreement between entrepreneurs aimed at making a profit by buying a product on the market and its subsequent resale at higher prices; convention (from the Latin conventio - contract, agreement) - an agreement between entrepreneurs, usually of the same industry, on a special issue (profit, price level, etc.) convention (from Latin conventio - contract, agreement) - an agreement between entrepreneurs, usually of the same industry, on a special issue (profit, price level, etc.) 6
Types of monopolies (continued) cartel (from the French cartel) is an association of entrepreneurs whose participants agree on the size of production, sales markets, conditions of sale, prices, payment terms, etc., while maintaining the production and commercial independence of the cartel (from French cartel) - an association of entrepreneurs, whose participants agree on the size of production, sales markets, terms of sale, prices, payment terms, etc., while maintaining production and commercial independence syndicate - a type of monopoly, an association of entrepreneurs that takes over carries out all commercial activities (price determination, product sales) while maintaining the production and legal independence of its member enterprises. Syndicate is a type of monopoly, an association of entrepreneurs that undertakes all commercial activities (price determination, product sales) while maintaining production and legal independence of its constituent enterprises trust (from English. trust) - an association of entrepreneurs, characterized by the fact that the enterprises included in it completely lose their production, commercial and legal independence and are subject to a single management trust (from the English trust) - an association of entrepreneurs, characterized by the fact that the enterprises included in it completely lose their production , commercial and legal independence and are subject to a single management 7
Types of monopolies (continued) concern (from the English concern) - an association of many industrial, financial and trading enterprises (different but interconnected industries, transport, services and the financial sector), formally maintaining independence, but in fact subordinate to the financial control and leadership of the dominant in the association of a group of largest entrepreneurs, a concern (from the English concern) is an association of many industrial, financial and trading enterprises (different but interconnected industries, transport, services and the financial sector), formally retaining independence, but in fact subordinate to the financial control and leadership of the dominant in the association of a group of largest entrepreneurs, a conglomerate (from the Latin conglomeratus - collected, accumulated) is a type of monopoly that unites enterprises belonging to various sectors of the economy and not connected by direct production cooperation (this type of monopoly is also called a diversified concern) conglomerate (from the Latin conglomeratus - collected, accumulated) - a type of monopoly that unites enterprises belonging to various sectors of the economy and not connected by direct production cooperation (this type of monopoly is also called a diversified concern) consortium (from the Latin consortium - participation, partnership) - monopoly, temporary agreement between several banks or industrial enterprises for the joint placement of loans, carrying out large-scale financial or commercial transactions, carrying out large-scale industrial construction consortium (from the Latin consortium - participation, partnership) - a monopoly, a temporary agreement between several banks or industrial enterprises for the joint placement of loans, carrying out financial or commercial transactions of a large scale, carrying out large-scale industrial construction combine (from the Latin combinare - to connect, combine) - an association of industrial enterprises of different but technologically interconnected production sectors, in which the products of one enterprise serve as raw materials, semi-finished products or auxiliary materials for another plant (from lat. combinare - connect, combine) - an association of industrial enterprises of different but technologically interconnected production sectors, in which the products of one enterprise serve as raw materials, semi-finished products or auxiliary materials for another 8
Equilibrium of a monopolist firm The volume of production Q m is such that the marginal revenue curve MR intersects with the marginal cost curve MC, and the price of the monopolist will be the price P m corresponding to this volume. Then the conditions for maximum profit under monopoly conditions: MR = MC
Conclusions from the equilibrium conditions of a monopolist: the monopolist does not set the maximum possible price that he would like to receive; the monopolist avoids the inelastic part of the demand curve when choosing a decision on sales volume and price; the degree of monopoly influence of the company is determined using the Lerner index (Lerner index); the degree of monopoly influence of the company is determined using the Lerner index L (Lerner index) at equilibrium of the firm, marginal costs are less than the price MC
Monopoly price is a price that steadily deviates from its possible level in a competitive market and is set by a dominant economic entity in the market or colluding enterprises in order to realize their economic interests through the abuse of monopoly power. A monopoly high price is a price that is set in order to obtain excess profits and (or) compensation for unreasonable costs by infringing on the economic interests of other enterprises or citizens, a monopolistically low price is considered, which, with stable demand due to a deliberate reduction in income (profit) in the short term, makes it difficult for other enterprises to enter the market and, thereby, limits competition in the market of a certain product Types of monopoly prices A monopsony low price is a price set by an enterprise that dominates the market for a certain product as a buyer in order to obtain excess profits and (or) compensate for unreasonable costs at the expense of the supplier 11
Monopoly profit is the above-average profit received by monopoly companies as a result of their special position in the market profit. Methods for monopolies to obtain super-profits maintaining monopoly high prices maintaining monopoly high prices reducing production in order to reduce production costs reducing production in order to reduce production costs creating a total shortage in society creation in a society of total shortages, direct destruction of part of the produced products, direct destruction of part of the produced products, standardization and unification of products standardization and unification of products 12
Concentration is the degree of predominance of one or more independent economic entities in the production system of interchangeable goods supplied to one geographic product market. The concentration index CR k is defined as the sum of the market shares of the largest market sellers: k k CR k = y i k N, CR k = y i k N, I=1 I=1 where: CR k concentration index N number of firms in the industry N number of firms in the industry y i = q i / Q share of production (sales) of the i-th firm in the total volume of output (sales) of the industry y i = q i / Q share of production (sales) ) i-th firm in the total volume of output (sales) of the industry, the market is considered unconcentrated when the index values for 3 firms CR 3 are below 45%, the market is considered unconcentrated when the index values for 3 firms CR 3 are below 45%, moderately concentrated when CR 3 = 45-70 % moderately concentrated at CR 3 = 45-70% highly concentrated at CR 3 > 70% highly concentrated at CR 3 > 70% 13 70% highly concentrated at CR 3 > 70% 13"> 
Measuring the level of concentration The Herfindahl-Hirschman Index HHI is defined as the sum of the squared shares of all firms operating in the market: The Herfindahl-Hirschman Index HHI is defined as the sum of the squares of the shares of all firms operating in the market: N HHI = y i 2 I = 1 I = 1 where: HHI Herfindahl-Hirschman index; y i = q i / Q share of production (sales) of the i-th company in the total volume of output (sales) of the industry; y i = q i / Q share of production (sales) of the i-th company in the total volume of output (sales) of the industry; N is the number of firms in the industry. N is the number of firms in the industry. Values of y i can be expressed as fractions or percentages: 0 
Determination of the level of concentration by two indicators IndicatorConcentration lowmediumhigh Concentration index CR k less than 45% 45%70%70%100% Herfindahl-Hirschman index HHI less
Monopoly power consists of the ability to set a price above marginal cost, and the amount by which the price exceeds marginal cost is inversely proportional to the elasticity of demand for the firm. The less elastic the demand for the firm, the more monopoly power the firm has. Factors that determine the elasticity of demand for the firm: the elasticity of the market demand (the firm's own demand will be at least as elastic as market demand) the number of firms in the market (if there are many firms in the market, then it is unlikely that one of them can influence the price) interaction between firms (even if There are only 2 or 3 firms in the market, none of them will be able to increase the price many times if the competition between them is aggressive, when each firm tries to capture the lion's share of the market) 16
Economic consequences of a monopoly Advantages from the point of view of scientific and technological progress confidence that economic profit will remain for a long time, and investments in R&D will give long-term returns; obtaining monopoly profit due to higher prices is an incentive for innovation; a monopoly helps reduce costs and realize economies of scale; a monopoly stimulates competition; presence sufficient financial resources for investment in scientific and technological progress 18
Antimonopoly activity of the state is a continuous, purposeful work of the relevant state structures not so much to limit the monopolistic exploitation of markets, but to eliminate the economic and other conditions themselves that give rise to certain monopolies. The purpose of the antimonopoly activity of the state is to provide better conditions for the operation of the market mechanism, increasing the overall competitiveness tone of the entire economy 19
The antimonopoly policy of the state is its activities aimed, 1st, at limiting the influence of existing monopolies on economic processes, 2nd, at preventing the emergence of new monopolies in the country's economy Contents: prohibition on limiting the independence of enterprises and entrepreneurs in the field of production and sale of goods and services ban on limiting the independence of enterprises and entrepreneurs in the production and sale of goods and services ban on establishing exceptional conditions for the activities of individual economic entities ban on establishing exceptional conditions for the activities of individual economic entities abolition of monopolistic agreements abolition of monopolistic agreements prohibition for competing firms to negotiate prices prohibition of competing firms from negotiating prices control on the securities market over the acquisition of shares of competing firms control on the securities market over the acquisition of shares of competing firms prohibition of actions related to unfair competition prohibition of actions related to unfair competition division of monopolistic companies division of monopolistic companies stimulation development of small and medium-sized businesses stimulating the development of small and medium-sized businesses control over the processes of creation, reorganization and liquidation of business entities control over the processes of creation, reorganization and liquidation of business entities control over the progress of privatization of monopolistic enterprises control over the progress of privatization of monopolistic enterprises 20
Demonopolization is a state policy to combat super-monopoly. Basic principles of demonopolization policy 1) determination of the zone of natural monopoly and development of methods for its regulation 2) comprehensive strengthening of market structures, since the more efficiently the market mechanism works, the weaker the monopolism 3) synchronization (simultaneous implementation) of the demonopolization process and economic management reforms 21
“Monopoly and competition” - Graphical analysis. Reasons for formation and main forms. Main characteristics of an oligopoly market. Demand curve in the absence of companies' agreement to change prices. Topic 3. Firm under conditions of imperfect competition. Conditions for maximizing profit. Main features of the monopolistic competition market. Price leadership model.
"Competition" - Monopolistic competition. Price signal. Giveaways. According to the degree of freedom. Availability of information about supply and demand, prices, profit margins. Oligopoly. In their pure form, the conditions of perfect competition do not occur in reality. By methods of implementation. O l i g o p o l i i .
“Competition in the economy” - Features of competition in Russia. In ed. The authors invite us to familiarize ourselves with the results of this study... Each slide changes automatically. Classification of types and types of competition. "Competition -. Michael Porter. Criteria for the competitiveness of an enterprise. And to win the war they do not disdain any means.
“Market structures” - Market pricing method - pricing in the sales area. The pricing mechanism in market conditions. The process of market formation in Russia. The place and role of price in a market economy. Market and price. Types of market structures. Market structure diagram BACK. Presentation of research results:
“Types of Market Structures” - General Equilibrium Analysis. Quantitative methods for assessing market structure. Physical capital. Monopoly and monopolistic competition. System of general equilibrium equations. Firm. Calculation. Labor price. Herfindahl-Hirschman index. Monopolistic competition. Excess profits of the monopolist. Reasons for taking into account the time factor.
“Types of competition” - Firm. Dairy store. Monopolistic competition. Rivalry. Legal barriers. Economic barriers. Competition. Bakery owner. Collision. Ideal market. Signs. Monopoly is being fought. Signs of classification of market structures. Natural monopolies. Monopsony. Oligopoly.
Slide presentation
Slide text: Monopoly in a market economy Economics lesson Iskandarov I.R.
Slide text: Monopoly (from the Greek mono - one, poleo - seller) is the exclusive right to carry out any type of activity (production, trade, fishing, etc.), granted to one person, a certain group of persons or the state.
Slide text: Monopoly presupposes the following conditions: The monopolist is the only producer of this product; The products are unique in nature and have no close substitutes; Penetration into the industry for other firms is blocked by a number of barriers; The monopolist's influence on the market price is very high.
Slide text: Barriers to entry into a market with a monopoly: exclusive rights obtained from the government or local authorities; patents and copyrights; ownership of resources, such as sources of raw materials; advantage of low costs of large production.
Slide text: Advantages of low costs of large-scale production: ATS Q ATSk ATSm ATSk - average costs of a competitive company ATSm - average production costs of a monopolist company 1/2Q Qm
Slide text: Types of monopolies: Closed Open Natural Artificial
Slide text: A closed monopoly is protected from competition through legal restrictions and prohibitions (most often it is a state monopoly). An open monopoly is a monopoly in which one firm, at least for some time, becomes the sole supplier of a product, but has no special protection from competition. A natural monopoly occurs in an industry in which long-run average costs are at a minimum only when one firm serves the entire market. An artificial monopoly is an association of enterprises created for the sake of obtaining excess profits and establishing market power.
Slide text: Features of the interaction of supply and demand in a monopoly market A monopolist has a certain power over the market, since he alone determines the supply of goods. In addition, he has power over the price of the product, but this power is not absolute, since the price also depends on demand, and supply depends on the price.
Slide text: To measure monopoly power, the Lerner coefficient is used: L=(P-MC)/P, where L is the Lerner coefficient; P – price; MC – marginal cost.
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Slide text: Determining how high a monopolist's price can be is related to demand and its elasticity. Prices can be increased if the corresponding reduction in demand does not entail a drop in the monopoly's income and profits. Otherwise, in order to increase income, the monopoly is forced to increase production, which implies a certain reduction in price in accordance with the law of supply and demand. Q P D1 D2 P1 P2 Q1 Q2 Q3 Q4
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Slide text: A monopoly searches for prices guided by the same rule as enterprises operating in a perfect market: 1. The volume of production and corresponding supply of goods must be such that marginal costs (MC) are equal to marginal revenue (MR): MC = MR 2. The monopolist considers MC and MR as the basis for setting the price - it should not be lower than them. However, in a monopolistic enterprise, unlike enterprises operating in conditions of perfect competition, marginal revenue is less than price (P) and, accordingly, average revenue (AR): MR< P = AR
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Slide text: Monopoly pricing rule: P = AR > MC = MR
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Slide text: Features of the interaction of supply and demand in a monopoly market Q P MR MC (=S) D Q wholesale Рм ATC Pe E ATCm Qe Monopoly profit
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Slide text: Problem 1. The fixed costs of the monopoly are 1,500 rubles. The dependence of the monopoly's variable costs on the volume of output is presented in the table: There is data on the volume of demand for the monopoly's products at various price levels: Determine: What volume of production will the monopoly choose and the corresponding price level; Monopoly profit. R, rub. 5000 3500 3100 2800 2600 2380 2100 Qd, pcs. 0 1 2 3 4 5 6
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Slide text: Solution: Monopoly, when determining the optimal production volume, is guided by the rule: MR=MC To solve the problem it is necessary to find MR, MC and ATS. TC=FC+VC; MC = (TCn-TCn-1)/(Qn –Qn-1); ATC= TC/Q; МR = (TRn-TRn-1)/(Qn –Qn-1); TR= P*Qd.
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Slide text: We summarize the obtained data in a table: Q, pcs. FC, rub. VC, rub. TC, rub. ATS, rub. MS, rub. R, rub. Qd, pcs. TR, rub. MR, rub. 0 1 2 3 4 5 6 1500 1500 1500 1500 1500 1500 1500 0 1000 1500 2500 4500 7000 10000 1500 2500 3000 4000 6000 8500 11500 - 2500 1500 1333 1500 1700 1916 - 1000 500 1000 2000 2500 3000 5000 3500 3100 2800 2600 2380 2100 0 1 2 3 4 5 6 0 3500 6200 8400 10400 11900 12600 - 3500 2700 2200 2000 1500 700
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Slide text: From the table data it follows that the equality MR = MC is achieved at Q = 4. We will find the price level corresponding to this volume from the demand scale: P = 2600. The profit of the monopoly is found as the difference between TR and TS: 10400-6000 = 4400 rubles. Answer: the monopoly will choose a production volume equal to 4, the corresponding price level = 2600, monopoly profit = 4400.
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Slide text: Graphic solution to the problem: 1 2 3 4 5 6 0 Q 1000 1500 2000 2500 3000 MR MC D 2600 ATC A
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Slide text: Problem 2. A profit-maximizing company is a monopolist in the domestic market, where the demand for its products is specified by the function: Qd = 90-2.5P. On the foreign market, it can sell any quantity of products at a fixed world price. The firm's total cost function has the form: TC = Q² +10Q+50. Determine the foreign market price if it is known that the firm sold ¾ of its output on the domestic market.
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Slide text: Solution: Let m be the world market price for the monopolist’s products; The company will sell products in the domestic market until its MRinternal. will not be equal to MR of the external market, i.e. m. That. the volume of production and sales in the domestic market is determined by the equality: MR internal. = m After this, the equilibrium of the monopolist is determined by the condition: MC = m (similar to the condition of a market with perfect competition) Thus. the total volume of production and sales is determined from the equality: MC=m
Slide No. 21
Slide text: In the domestic market, production volume (q) will be: Qd=90-2.5p Pd=36-0.4q MR=TR׳=(Pd*q)׳=(36q-0.4q²)׳ =36- 0.8q MR=m 36-0.8q=m q=1.25(36-m) Total production volume (Q): MC=TC׳= (Q² +10Q+50)׳ = 2Q +10 MC=m 2Q +10=m Q=(m-10)/2 From the condition that q=3/4Q, we find: 1.25(36-m)=3/4(m-10)/2 m=30 Answer: price foreign market = 30.
