Types of market structures: perfect competition, monopolistic competition, oligopoly and monopoly. What is perfect competition - with examples and explanations Perfect competition market examples of markets

In the 19th century, a small funeral home operated and flourished in Kansas City. But one not very happy day, its owner Almon Strowger calculated his income over the past months and found that turnover was falling, but his main competitor, on the contrary, had increased sales.

A small investigation showed that the fact was that the wealthiest clients had already begun to use telephones, and in the event of the death of a relative, they called the telephone exchange, where the wife of Strowger’s main competitor worked. When she was asked to connect with a funeral agency, of course, she redirected everyone to her own husband.

This is the story about unfair competition. And it could have ended in completely different ways. Having counted his losses, the entrepreneur could well have closed his own agency or killed the telephone operator in a fit of rage. But Almon Strowger acted differently: when complaints to the station management did not yield results, he focused on creating a mechanism that would replace manual labor. So in 1892, the first automatic telephone exchange was invented and patented, which the creator himself called “a telephone without young ladies and curses.”

Such is the diversity of competition! It can serve as an engine of progress, or, on the contrary, it can become the cause of brutal crimes. And in order to form your own opinion whether competition is beneficial to society or dangerous for it, you will have to understand in detail the nature of this phenomenon. Shall we get started?

Competition -what is this in simple words

The word “competition,” borrowed from the German “konkurrieren,” was first recorded in the Russian dictionary in 1878. The term originates from two Latin words:

• con – together;
• currere - to run.

Thus, competition is the rivalry of several subjects to achieve one goal. Moreover, the successes of one always mean losses for the other. Biologists consider competition to be the driving force of evolution: it is thanks to it that the fittest representatives of flora and fauna are preserved on the planet, and the weakest gradually die out.

Economists characterize competition as a struggle between companies. Each of them defends its own interests: it tries by any means to attract the attention of buyers, sell as many goods and services as possible and ultimately get maximum profit.

Interestingly, the word “competition” has the same roots as “competition”. But in this case we're talking about not about the constant struggle for the buyer, but about the desire to achieve victory in the competition.

Competition as an economic law

For the first time, humanity encountered the phenomenon of economic competition in ancient times, in conditions of simple commodity production. Already in primitive society, each artisan sought to extract maximum benefit for himself to the detriment of other participants in market exchange.

With the emergence of the slave system, competition only intensified. Farms became larger, forced labor and employees allowed him to produce more and more, strengthening his position in society.

But it was only in the 18th century that Adam Smith, a Scottish economist and philosopher, became interested in competition as a phenomenon. He drew attention to the fact that a stable connection is emerging between rival companies. And he suggested that competition is not an accident, but an objective force that actively influences not only sellers and buyers, but also the development of the industry as a whole.

At the same time, 3 conditions necessary for the emergence of competition were formulated:

1. Complete economic independence of each manufacturer, in which each company acts solely to achieve its goals.
2. The dependence of each seller on the current market situation: volume of supply and demand, size wages, exchange rate. So, if the average salary of a sales consultant in Moscow is 40,000 rubles, the company can hardly count on finding, and most importantly, retaining an experienced, conscientious employee by offering him 25,000 rubles a month.
3. Lack of agreements with other manufacturers, that is, the struggle of all against all.

In such a situation, the only way for the manufacturer to remain a winner is to fight to improve the quality of the product, reduce its own costs, and subsequently prices. This is how the law of competition works - an objective process of removing expensive, low-quality products from the market. The essence of the law is revealed more fully through the functions that competition performs in the economy.

Functions of competition in economics

In a market economy, competition has 6 main functions:

1 Regulating. In conditions of free competition, firms produce exactly as much product as the consumer needs. Equilibrium is not established immediately; the company arrives at it after several months of work, analyzing the volume of demand and sales.

For example: manufacturer of school desks made of natural wood "KIND" for summer season sells 1500 - 1700 budget Novichok models. If by June the company does not fulfill production plan In order to meet demand, she will have to introduce additional shifts, urgently expand the staff of workers, but still, not every buyer will agree to wait for their purchase instead of the standard 3 days 2-3 weeks. Some profits will be lost. The reverse situation is also a lose-lose: an excess of production entails the need to expand warehouses, and with them the overall costs of the enterprise.

Thus, competition in the market determines the amount of demand for each firm's products and determines the optimal volume of production.

2 Allocative. Its name comes from the English “allocation” - “placement”. And it means that in competitive environment success is easier to achieve for enterprises that are located closest to production resources.

It is not for nothing that all hydroelectric power plants are located near large water sources, and the energy they produce supplies nearby regions. There is also no point in installing wind power plants in the Moscow region, which belongs to the areas of the 1st, most windless, category. But the Krasnodar Territory, according to the wind map of Russia, is assigned a coefficient of 6. And here the installation of wind power plants will be completely justified.

3 Innovative. The rapid development of technology in the modern world is the result of competition. The easiest way to trace this process is through evolution. mobile phones. Only 36 years have passed since the release of the first model intended for free sale - Dyna TAC 8000X. On the scale of science, this is quite a bit. But today a smartphone is already a full-fledged replacement for a camera and game console, player and computer. And the engineers are not going to stop: leading manufacturers present new products every six months.

4 Adaptive. This function lies in the ability of enterprises to adapt to external environment, offering customers exactly what they expect. Thus, most grocery stores have either switched to 24-hour operating hours or close closer to midnight. This allows customers to buy groceries after work in peace, and allows entrepreneurs to increase profits.

5 Distribution. The market is a living organism that is constantly changing. Every day, entrepreneurs assess the situation and decide for themselves whether it makes sense to continue investing their own resources in existing projects or whether it’s time to explore new horizons. Thus, from low-income industries, where there is already a sufficient number of producers or the demand for products is steadily falling, there is a constant outflow to more promising areas.

6 Controlling. In conditions of fair competition, no manufacturer or seller can take a dominant position in the market and become a monopolist.

Working together, all the functions of competition transform the industry into an efficient, self-regulating system. And the totality competitive industries creates a more or less successful market economy. That is why competition is often called the engine of a market economy.

Advantages and disadvantages of competition in the market

For society as a whole, competition is a positive phenomenon. She:

• stimulates the development of scientific and technological progress, thereby improving the quality of life of the population;
• forces manufacturers to quickly respond to consumer requests: expand the range, improve the quality of goods, look for ways to reduce costs;
• forms fair market prices as opposed to extortionate pricing policy monopolists;
• prevents the development of shortages of goods and services.

And the main sign of the presence of free competition in most sectors of the state and an effective market economy in general is the increase in the middle class among the population.

There are also negative aspects in the competitive environment:

• a huge temptation for many manufacturers to use “dirty” methods to combat competitors;
• instability of the situation on the market for goods and services: out of 100 entrepreneurs, 95 burn out in the first couple of years of their activity;
• a large number of bankrupt commodity producers provokes an increase in unemployment;
• income is distributed unevenly between different social groups population.

Conditions for maintaining competition

Free competition is a very unstable market model. Left to their own devices, entrepreneurs first eliminate weak players from the game. They leave due to insufficient resources:

And then viable companies begin to negotiate among themselves: to maintain prices and even merge. Economically, this is more profitable for companies than constantly developing technologies and looking for ways to reduce costs. But the buyer ends up with inflated prices and an artificially created shortage.

2 economy class hairdressers have opened in a residential area. But the first one was opened by a student without initial capital, and the second is an experienced businessman with sufficient capital who knows well that new business In the first months it requires constant infusions. Given the same prices, the chances of a hair salon owned by a student surviving are minimal.

But a businessman can attract visitors with a bright opening, greater comfort, for example, by immediately installing a TV. Later he will send masters to advanced training courses and offer new services, and maybe even lure best workers from your competitor. In an effort to become a monopolist, he can work for a limited period of time even at a loss, which a student cannot afford. But after the competing hairdresser goes bankrupt, it will be possible to dictate their prices.

Thus, competition naturally always, sooner or later, leads to the emergence of a monopolist enterprise. And the only way to preserve the rivalry of entrepreneurs is government intervention.

Only external deterrents can protect firms from each other and prevent unfair competition. Therefore, all developed countries of the world have adopted antitrust legislation. And they actively use 2 main methods of protecting competition:

1. ban on the creation of monopolies;
2. strict regulation of prices for products of natural monopolies, for example, fixed tariffs for public transport tickets.

State regulation of competition

For Russia, the issue of supporting competition is of particular importance. For many decades, our country has been actively using the advantages of large-scale production, its specialization and concentration. In fact, the entire industry was in the hands of monopoly enterprises.

And with the transition to a market economy, it was necessary to create a new legal basis, which could support the nascent small and medium business. The first such document was the RSFSR Law “On Competition and Restriction of Monopolistic Activities in Product Markets,” adopted on March 22, 1991. In connection with the active development of the banking services market, on June 4, 1999, another legal act was approved - the Federal Law “On the Protection of Competition in the Financial Services Market”.

In 2006, both regulations were replaced by the Federal Law “On the Protection of Competition”. Moreover, the implementation of antimonopoly policy is also prescribed in the Constitution of the Russian Federation. Article 34 states unequivocally: “It is not permitted economic activity aimed at monopolization and unfair competition.”

Monitoring the implementation of the provisions of the Law is carried out:

• Ministry of the Russian Federation for Antimonopoly Policy and Entrepreneurship Support;
• Its territorial divisions.

In order for the activities of an enterprise to be recognized as threatening free competition, the share of its products in the market for goods and services must be 65%. But there are exceptions: the antimonopoly committee can impose sanctions even with a share of 35%, if the company prevents new firms from entering the industry and dictates its terms to competitors.

Participants in competitive relations

Participants legal relations legislation calls subjects. In competition law, the main ones are:

• sellers or business entities, that is individual entrepreneurs and enterprises of all forms of ownership that carry out income-generating activities;
• buyers of goods or services. For them, the Law does not prescribe responsibilities, but acts precisely in their interests. If there is a suspicion of violations of antimonopoly legislation, buyers have the right to file a complaint with the territorial division of the antimonopoly committee.

The joint actions of buyers and sellers form supply and demand in the markets for goods and services. In conditions of free competition, they are balanced naturally and set economically fair prices.

Other entities can also influence competitive relations:

These entities do not participate in competition, but are within the scope of antimonopoly legislation, as they are capable of providing individual companies with significant advantages: issuing a license, financing, and establishing tax benefits. All this negatively affects other participants in the competition.

It is interesting that the circle of subjects of competition law includes not only already operating enterprises and real buyers, but also potential sellers and potential consumers:

• potential seller is one who is ready to begin producing and/or selling a product within 1 year that is already on the market at a price not exceeding the market average by more than 10%. At the same time, production costs will be recouped within 12 months;
• potential buyer– someone who is ready to purchase a product, but for some reason has not yet done so.

Since, in an effort to oust competitors, firms often join forces, the Law defines another subject of competition law – a group of persons. They can be united by relationships of any kind: labor or contractual, property or related.

Although their actions are coordinated and aimed at achieving the same goal, in court proceedings the extent of each person's participation in the crime is considered individually.

Forms of competition

To remain within the limits of the law, today it is not enough not to cross the 65% barrier of control over the industry. On October 5, 2015, Chapter 2.1 was introduced into the Federal Law “On the Protection of Competition”. Unfair competition. And now the Antimonopoly Committee has the right to consider not only the degree of influence of the company, but also the methods of its struggle. Therefore, it is very important to understand the line where fair competition, approved by society, ceases to be such.

Fair competition – honest and legal methods of competition that do not conflict with generally accepted business norms:

Unfair competition – any actions of business entities that contradict the law and business ethics, and may cause harm business reputation competitors, causing them financial damage.

Methods of unfair competition:

Types of Competitive Markets

Depending on the degree of competition between firms, there are 4 main types of markets for goods and services:

1. Perfect competition, at which the industry operates great amount companies, and there are no barriers for beginners. A product in a perfectly competitive market is standardized. For example, in each region there are hundreds of farms, which provide stores with eggs, milk, vegetables and fruits. Farmers cannot influence the price of their products in any way, and any landowner is able to special effort enter the market.
2. Monopolistic competition- a market in which a large number of sellers, and there are no barriers to entry into the industry. But the product on such a market has its own peculiarity. For example, one publishing house publishes exclusively detective stories, another - women's novels, and a third - popular science literature. Competition here is non-price, and advertising and brand awareness help increase it.
3. Oligopoly- a market not represented big amount sellers, largely due to the fact that entry into the industry is difficult. For example, to produce household appliances, one desire is not enough. It will require serious financial investments, engineering developments, highly qualified personnel, permits from regulatory authorities, well-thought-out marketing strategy. Of course, few entrepreneurs are capable of realizing all this. Those who succeed become the few major players who can already influence pricing.
4. Absolute monopoly. The market is represented by one single seller, and entry into the industry is blocked. The monopolist determines the volume of output and has unlimited power over prices. Example: OJSC Gazprom, OJSC Russian Railways.

Thus, the weaker the competition in the market for goods or services, the more power the producer has. And vice versa, when there are many sellers, the buyer has the opportunity to choose the product that suits him best in terms of price and quality.

Video: Competition and its types

Types of competition in economics

Economists combine all 4 market models into 2 large groups, highlighting:

1. perfect competition;
2. imperfect competition.

Perfect or pure competition– an ideal model, an abstraction that is very rarely found in real life. It is characterized by:

• A very large number of sellers in the industry. They act independently of each other, each working in their own interests. Thus, there are a huge number of fishing enterprises in the world. And the largest of them account for approximately 0.0000107% of the world's catch. Even if one or more firms increase their catch several times, this will not affect the state of the industry in any way.
• Standardized or homogeneous product. The product is similar or so similar that, by and large, it makes no difference to the buyer which seller makes the purchase. A striking example: currency exchangers.
• The seller's inability to influence the price of the product. For example, if at a vegetable market 3 sellers at once set a price of 300 rubles for 500-gram baskets of strawberries, it makes no sense for the fourth to demand 400 rubles. He simply won’t sell the berries, and they will spoil. But it is also unprofitable to reduce prices if there is an opportunity to earn more. Thus, in a perfectly competitive market, the seller always takes the role of a price follower.
• Free entry into and exit from the industry. New firms can enter a competitive market without having either serious financial capabilities or technological innovations. Legislative authorities do not interfere with them; on the contrary, all information about doing business is freely available. Example: stall trade, creation of construction and repair teams.

is a situation in which one or more conditions of perfect competition are not met:

• Product y different sellers although it belongs to the same group, it has its own characteristics. For example, one sells Golden apples, and the other sells Semerenko;
• There are barriers to entry into the industry: for example, to open the most modest gym you will need at least 1 million rubles. And this is not an amount that any potential entrepreneur can easily find;
• There are already leading enterprises in the industry. In this case, we are talking more about oligopolistic competition;
• An entrepreneur has the opportunity to influence the price of his products from the very beginning. For example, the same strawberry sellers in a small market may well agree on a single price. Or, using greenhouses, the farmer will achieve ripening of the berries 2 weeks earlier, and will be able to sell his harvest at a much higher price.

Thus, imperfect competition is a market model that, to varying degrees, allows sellers to influence the price of their products. And monopolistic competition, oligopoly, monopoly are just varieties imperfect competition.

Types of competition by degree of freedom

The phrase “free competition” has long been stable. It implies that the activities of individual entrepreneurs are not influenced by any government bodies, nor larger and more influential market players.

In contrast to free competition, there is also regulated competition. It occurs when one or more firms achieve significant market share and are able to influence prices and discourage newcomers from entering the industry. The regulatory function in this case is performed by the state.

Types of competition by industry

Economics deals with market competition - the struggle of producers for each buyer. Demand in this market is limited by the solvency of consumers, and the struggle is waged by all legal means: price and non-price.

Market competition is:

• intra-industry:
• intersectoral;
• interethnic.

Intra-industry competition- This is rivalry between manufacturers or sellers operating in the same industry. They produce or sell similar products that differ in price, model range, quality. Moreover, intra-industry competition can be:

• subject;
• species.

Subject competition– one in which rival firms produce identical products. It may vary only slightly in quality. Example: Russian manufacturers of bed linen in the middle price category - “SiliD”, “MONA LIZA”, “AMORE MIO”.

Species competition- a type of rivalry in which companies produce the same type of product: shoes, clothing, furniture, but at the same time it differs in some serious parameters. For example, the RIMAL shoe factory produces affordable children's shoes for absolutely healthy children, and the MEGA Orthopedic company specializes in sewing orthopedic models.

Interindustry or functional competition is the struggle between representatives of different industries. For example, residents of Moscow can get to Sochi as by rail, and by plane. The first is cheaper, the second saves time. But in general, both types of transport help the traveler achieve his goal.

Interethnic competition is a competition between two countries. Its goal may be not only to conquer the largest possible sales market, but also prestige on the world stage. Example: the confrontation between the USA and the USSR in the field of space exploration.

Competition methods

There are two ways to try to beat your competitors: by lowering the price or by offering more attractive conditions, but at the same prices.

The first strategy is price competition. For example, a newly opened dry cleaner offers a 20 percent discount on its services. The business owner understands perfectly well that in the future he will not be able to maintain such a low price, but in the short term the strategy will provide a large influx of customers, and if they like the service, they will probably come back again and again.

Good service is already non-price competition, which is valued higher by most buyers than more low price and possible discounts. Our subconscious perceives a price reduction more aggressively, forcing us to meticulously look for a catch. Methods of non-price competition (memorable advertising, convenient delivery conditions, beautiful packaging, other marketing gimmicks) seem more noble, although if you dig deeper, there is no difference.

For example, with the same prices for bottled water, the Aqua company will also offer free shipping. In terms of conversion, the price per liter of water for the buyer will be lower. And non-price competition will turn out to be the same as price competition.

Price competition is not always a short-term phenomenon. Thus, with timely updating of equipment, improvement of the system and logistics, the manufacturer can really achieve a significant reduction in costs.

While maintaining the size of the trade margin and the achieved sales volume, the company's profit does not decrease, although for the end consumer the product will become significantly cheaper. In such a situation, competitors can either follow a more successful company or leave the market.

Competition beyond economics

Competition as a competition for a good that is available in limited quantities is characteristic of politics and science, sports and military affairs, art and creativity. Perhaps there is not a single human activity in which it would be impossible for a struggle for money, power, fame or respect to arise.

Achieving a goal occurs through competitive actions, a concept formulated by the American economist Michael Porter. It involves the commission of actions directly or indirectly addressed to competitors. Their goal: to strengthen their position and at the same time weaken their opponent.

Competition in biology

If in human society competition is rivalry, in the world of flora and fauna the synonymous phenomenon is more likely to be war. A war for a place to live, food sources, a war for life itself.

Competition in biology is of 2 types:

1. Intraspecific competition. The most desperate and brutal struggle flares up between representatives of the same species. Birds fight to the death for the best nesting places, walruses and seals fight to win a female for mating, and out of hundreds of young fir trees in a clearing, only 2-3 trees grow to adulthood. The rest die from lack of sunlight.
2. Interspecific competition flares up between individuals different types. Moreover, the Russian biologist G.F. Gause proved that if 2 species with the same needs live in the same territory, the stronger one will definitely displace the weakest. Thus, in Australia, the native stingless bee has already been almost completely destroyed. And all because the honey bee was brought to the mainland several decades ago.

Competition of norms in law

In legal practice, situations often occur when the same action is regulated by two different regulations. And the court will have to decide which of the two documents to apply. Competition between norms occurs:

• temporary, when the rules were in force during different periods of time;
• spatial: for example, in different states of America, different punishments are provided for the same crime;
• hierarchical: all regulations have different legal force. Main legal act in our country - the Constitution of the Russian Federation, then come the Federal Constitutional Laws, after them Federal laws and so on.

But the most common competition of norms in law is substantive. The easiest way to explain it is with an example. Let's say a crime is committed with two aggravating circumstances. They are described in different articles of the Criminal Code. When determining the punishment, the judge, as a rule, classifies the crime according to the norm that provides for a more severe punishment. And, conversely, in two mitigating circumstances, a rule prescribing a more lenient punishment is applied.

Answers on questions

Competitively capable as spelled

The correct spelling is “competitive” (without the “n”). This word consists of two roots: “competition” - the “n” and “capable” are missing here.

What is a competitor

A competitor is a person or group of people, or it can be a company or even a government, that competes with another person(s) for ownership or interests.

Conclusion

Competition is the driving force of evolution. It condemns the weak to extinction and allows the strongest to survive. It is thanks to it that increasingly resistant strains of bacteria and viruses appear on the planet that are resistant to known antibiotics and antiviral drugs. Hundreds of animal species and thousands of plant species have become extinct due to competition. But those that survived managed to adapt to droughts and frosts, polluted air and the omnipresence of humanity.

In the economy, competition acts for the benefit of the consumer, forcing sellers to reduce prices and expand their range, manufacturers to improve the quality of goods and design new, even more advanced models.

Entrepreneurs are afraid of competition and do not like it. Still would! It is impossible to relax even for one day, otherwise a more efficient comrade will grab a share of the profit. And yet, fair competition is the fairest fight, which accurately identifies the losers and those who chose the right strategy.

Roman Kozhin

Author of the blog "My Ruble", former head of the credit department at a bank. Currently an Internet entrepreneur and investor. I talk about how to effectively manage your money, increase it profitably, and earn more. Thanks to the Internet, I moved to the sea. You can follow my life on social networks using the links below.

Imperfect competition is an economic phenomenon, a market model in which manufacturing firms have the opportunity to have a real influence on the price of a product. On the other hand, there is the concept of perfect competition. This economic model is a system characterized by an infinite number of buyers and sellers, homogeneous and divisible products, high mobility of production resources, equal and complete information access of all participants to the price of products, goods, and the absence of any barriers to entry and exit to the market. Violation of at least one of these conditions theoretically means imperfect competition.

It is clear that achieving the conditions pure competition almost impossible, while imperfect competition is a widespread phenomenon.

Imperfect competition as an economic phenomenon

Based on the properties inherent in the conditional model of perfect competition, it is possible to determine what features are inherent in imperfect competition and how they manifest themselves in real market conditions.

This structure is characterized by various kinds of barriers that limit entry into and exit from a certain market sector. There are restrictions on product price information. The product itself is either unique, or its properties are differentiated compared to others, which leads to the ability of manufacturers and sellers to control prices for it: to inflate it, to keep it at a certain level. The goal is to maximize profits.

A striking example of imperfect competition are natural monopolies - firms whose activities are related to the supply of energy resources (electricity, gas) to the population. With low costs, such monopolists can set any price for their products in the future, but the entry barriers to this market for new firms are insurmountably high.

The characteristic features of market relations under imperfect competition are thus defined quite firmly:

1. Monopolies, small and medium-sized businesses are present on the market at the same time. They compete with each other, but monopolists, to one degree or another, have an advantage by regulating prices. This applies to both buyers and sellers of the product.
2. Imperfect competition in the future is aimed at monopolizing the market (sales, raw materials, market work force etc.), in contrast to perfect, which is characterized by the main goal - the sale of goods.
3. The process of competition captures not only sales markets (retail, wholesale), but also production. Innovative developments in the manufacturing sector are becoming a method of fighting competitors. The purpose of their implementation is to reduce production costs.
4. Various methods of competition are used: from the use of price levers, as the most obvious, to non-price ones, aimed at improving the properties of the product, improving marketing and advertising policies. Non-economic methods are also used, which are usually classified as unfair competition.

Forms of struggle for markets with imperfect competition have the following characteristics:

• price– reduction in prices for products, reduction in costs in the production and sales process, manipulation of pricing, price maneuvers designed to attract buyers;
• non-price– emphasis on product quality, attracting customers through various promotions, offering more goods or services for the same price, non-standard advertising campaigns;
• non-economic– industrial, economic espionage, bribery of responsible persons, etc.

Imperfect competition in all its diversity was considered in the works of E. Chamberlin, J. Hicks, J. Robinson, A. Cournot.

Forms of imperfect competition

Oligopoly characterized by a fairly limited number of sellers of goods or services (communication services market). Oligopsony— a fairly limited number of buyers (the labor market in small towns). At monopolies There is only one seller on the market (gas supply). At monopsony— the only buyer (sale of heavy weapons).

At monopolistic competition there are a large number of manufacturers and sellers in the market sector, selling similar in properties, but not identical goods (most often found in retail trade, the consumer services sector).

Experts conduct comparative analysis these forms in the context of four market factors:

• number of sellers (manufacturers);
• market product differentiation;
• opportunities to influence prices;
• entry-exit barriers.

For example, in the case of a monopoly, there is only one quantitative indicator, prices are completely controlled, products have unique qualities, and barriers to entry into the market are very high, etc.

Labor market

Imperfect competition in the labor market is a complex phenomenon that includes several important factors. Note that this market sector is most susceptible to regulation in order to minimize the negative consequences of an “imperfect market”.

Regulating factors of the labor market:

1. State. Legislatively regulates the level of wages, preventing it from completely falling under the influence of market processes (income indexation, establishing a minimum wage, etc.).
2. Trade union organizations. Direct efforts to increase the level of wages for workers in the industry and region, prepare and carry out the signing of agreements between trade unions and employers - market participants, in the indicated direction.
3. Large firms, corporations. They set the level of remuneration for specialists, which they retain for a long time. Not interested in frequent revision of employee pay levels.

Market laws in relation to the labor market work in a special way. The sale of labor, skills and abilities is usually secured by a long-term employment contract, which provides job security to the employee, despite fluctuations in supply and demand. In addition, individual employment contract or the agreement cannot contain conditions worse than those enshrined in the collective agreement or labor legislation.

In this case, the seller receives job guarantees and is removed from market relations for the duration of the contract with the buyer.

The presence of restrictions on worse conditions in comparison with a collective agreement does not allow the employer to endlessly worsen the conditions of individual agreements by choosing the most “accommodating” sellers. This factor is most significant if there is no trade union organization.

Imperfect competition and government regulation

Imperfect competition, being far from ideal models for building an economy, has its negative aspects and consequences: rising prices for products that are not justified by increased costs, an increase in production costs themselves, inhibition of progressive trends, a negative impact on competitiveness on the scale of world markets, and finally, inhibition of development economy.

At the state, government level, there are always administrative barriers for market participants, for example, exclusive rights that the state grants to a particular company.

On a note! Regulatory barriers can be expressed not only in government regulation as such, but also in the possession of the right to rare natural resources, progressive scientific, technical developments, confirmed by patent, high level starting capital required to enter the market sector.

At the same time, the state, realizing the global danger of market monopolization, is fighting it. Antimonopoly regulatory measures are a package of antimonopoly legislation that is constantly being improved and takes into account market trends. On the basis of it, administrative antimonopoly control of markets is carried out by authorized state antimonopoly structures. An effective mechanism for influencing monopolists is being developed.

Control is represented by a set of financial sanctions, the organizational mechanism does not affect the monopolists themselves, destroying them as a market phenomenon, but indirectly - by supporting small and medium-sized businesses, reducing customs duties etc. Legislative regulation often directly prohibits certain economic steps that contribute to the formation of even larger monopolies, for example, the merger of large firms in a certain market sector.

Results

1. Imperfect competition, as opposed to a perfect, ideal model, exists in real market structures Oh modern economy. The goal of imperfect competition is to capture the market and monopolize it.
2. Forms of imperfect competition differ in the number of buyers and sellers in a given market sector. You can conduct a comparative analysis of each form, paying attention to the level of barriers to entry into the market, the ability to influence prices, etc.
3. The labor market in conditions of imperfect competition is subject to many regulatory factors from the state, trade unions, and large companies.
4. The presence of an employment agreement leads to the temporary withdrawal of the seller from the labor market and allows him to be guaranteed stable employment, i.e. demand labor resources which he possesses.

Today we will look at one example of perfect competition and find out why there cannot be pure perfect competition?

In fact, it is difficult to give examples of perfect competition. Let's take the summer sale of agricultural products. The manufacturer cannot increase the price of the product, as this will greatly affect product sales. Therefore, they set the price closer to the market price (the same as everyone else), and some even lower prices (probably by cutting costs) to increase the number of sales. Still, such an example cannot be given to purely perfect competition. Although producers sell the same goods (carrots, cucumbers, tomatoes, etc.), they are not on equal terms. Some producers are huge agricultural complexes, others are ordinary private owners, grandparents, for example. Therefore, usually one or several large firms supply a lot of products to stores, thereby completely controlling it, and other small farms that do not pose much competition to large firms.

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This already reminds me of an oligopoly. Therefore, it is impossible to give examples of pure perfect competition, since it simply does not exist. Other examples partly remind us of perfect competition, but are not completely perfect.

Updated: 2017-04-02

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The main features of the market structure of perfect competition in itself general view were described above. Let's take a closer look at these characteristics.

1. The presence in the market of a significant number of sellers and buyers of this good. This means that not a single seller or buyer in such a market is able to influence the market equilibrium, which indicates that none of them has market power. Market subjects here are completely subordinated to the market elements.

2. Trade is carried out in a standardized product (for example, wheat, corn). This means that the product sold in the industry by different firms is so homogeneous that consumers have no reason to prefer the products of one company to the products of another manufacturer.

3. The inability of one firm to influence the market price, since there are many firms in the industry, and they produce standardized goods. In perfect competition, each individual seller is forced to accept the price dictated by the market.

4. Lack of non-price competition, which is due to the homogeneous nature of the products sold.

5. Buyers are well informed about prices; if one of the manufacturers increases the price of their products, they will lose customers.

6. Sellers are not able to collude on prices, which is due to the large number of firms in this market.

7. Free entry and exit from the industry, i.e., there are no entry barriers blocking entry into this market. In a perfectly competitive market, there is no difficulty in starting a new firm, nor is there any problem if an individual firm decides to leave the industry (since firms are small in size, there will always be an opportunity to sell the business).

As an example of markets of perfect competition, markets can be called individual species agricultural products.

For your information. In practice, no existing market is likely to meet all the criteria for perfect competition listed here. Even markets that are very similar to Perfect Competition can only partially satisfy these requirements. In other words, perfect competition refers to ideal market structures that are extremely rare in reality. However, it makes sense to study the theoretical concept of perfect competition for the following reasons. This concept allows us to judge the principles of functioning of small firms existing in conditions close to perfect competition. This concept, based on generalizations and simplification of analysis, allows us to understand the logic of firm behavior.

Examples of perfect competition (with some reservations, of course) can be found in Russian practice. Small market traders, tailor shops, photo studios, car repair shops, construction crews, apartment renovation specialists, peasants at food markets, stalls retail can be regarded as the smallest firms. All of them are united by the approximate similarity of the products offered, the insignificant scale of the business in terms of market size, the large number of competitors, the need to accept the prevailing price, i.e., many conditions of perfect competition. In the sphere of small business in Russia, a situation very close to perfect competition is reproduced quite often.

The main feature of a perfect competition market is the lack of control over prices on the part of the individual manufacturer, i.e., each firm is forced to focus on the price set as a result of the interaction of market demand and market supply. This means that the output of each firm is so small compared to the output of the entire industry that changes in the quantity sold by an individual firm do not affect the price of the product. In other words, a competitive firm will sell its product at the price already existing in the market. As a consequence of this situation, the demand curve for the product of an individual firm will be a line parallel to the x-axis (perfectly elastic demand). This is shown graphically in the figure.

Since an individual producer is not able to influence the market price, he is forced to sell his products at the price set by the market, i.e., at P 0.

Perfectly elastic demand for a product competitive seller does not mean that the firm can indefinitely increase production at the same price. The price will be constant to the extent that normal changes in the output of a single firm are small compared to the output of the entire industry.

For further analysis, it is necessary to find out what will be the dynamics of the indicators of gross and marginal income (TR and MR) of a competitive company depending on the volume of production (Q), if the company sells any volume of production at a single price, i.e. P x = const . In this case, the TR graph (TR = PQ) will be represented by a straight line, the slope of which depends on the price of products sold (P X): the higher the price, the steeper the slope the graph will have. In addition, a competitive firm will face a marginal revenue schedule parallel to the x-axis and coinciding with the demand schedule for its product, since for any value of Q x the value of marginal revenue (MR) will be equal to the price of the product (P x). In other words, a competitive firm has MR = P x. This identity occurs only under conditions of perfect competition.

The marginal revenue curve of a perfectly competitive firm is parallel to the x-axis and coincides with the demand schedule for its product.

IN economic theory, as in physics, there are different kinds of abstractions. Abstraction is something that does not exist in nature in its “pure form”. But the introduction and study of abstract concepts helps to study real objects, processes and phenomena close to them. So, from the school physics course we know about the “material point” and the “absolutely solid body”.

An example of an abstract concept in economics is pure or perfect (absolute) competition.

What is pure competition

Perfect competition is a model of economic functioning in which neither sellers nor buyers influence the price, but only contribute to its formation through the mechanisms of supply and demand. In other words, both parties, the seller and the buyer, adapt to the equilibrium state of the market.

With perfect competition, there are many buyers and sellers in the market and there is no monopoly at all.

Firms enter and exit the market completely freely, and information about the price of a product is available to any market participant. Sellers and buyers depend on how the market will develop. In order to maximize profits, sellers have to improve and use the achievements of scientific and technological progress not only in the process of direct production of products, but also when selling them.

The use of advanced technologies will inevitably lead to a reduction in costs, and therefore increase the profit of the enterprise.

We list the main properties:

• homogeneity, divisibility of products. The product of one seller may well be replaced by the products of another;
• a huge number of sellers - all market demand is covered not by several firms (oligopoly) or one (monopoly), but by hundreds and even thousands of similar enterprises;
• high degree of mobility production factors. Neither manufacturers, nor sellers, much less the state, influence price formation. The cost of goods depends solely on three factors: production costs, supply and demand;
• absence of barriers to entry into the market or, conversely, to exit it. This feature should be understood as follows: to begin with entrepreneurial activity businesses do not require licenses or permits. Such enterprises are, for example, shoe repair shops, tailor shops, etc.;
• all market participants have equal access to information about the price of goods.

Pure competition is characterized by the presence of all of the above characteristics.

Otherwise, competition is called imperfect. One example of imperfect competition is bribing officials for preferences and lobbying.

In conditions of absolute competition, one global trend is observed - a decrease in the profit of each seller. Perfect competition in its pure form does not exist anywhere. If pure competition were introduced into practice, it would quickly lead to market decline. Thus, enterprises operating in the market will sooner or later modernize their production base.

But, despite this, the price will continue to decline - competitors will “take bread” from each other, conquering a larger market. In such conditions, income will quickly give way to losses and the situation can only be saved with the help of external intervention (for example, government regulation).

Examples

Despite the fact that market competition in its “pure form” is never found, this market model can be used to describe the functioning of small firms - car repair shops, photo studios, construction crews, stalls, etc. All these enterprises are united by approximately the same cost of production, the scale of activity is negligibly small compared to the size of the entire market, a huge number of competitors, the forced need to accept the “rules of the game” formed by the participants in this industry.

The opposite of perfect competition is monopoly.

For example, the absolute monopolist of the Russian gas sector is Gazprom. Monopolies have a negative impact on the market, since such firms do not need to invest money in their development. Anyway, no one has other similar products - they will buy the products under any conditions.

Usually the real market operates in some intermediate form - there are several large players, the rest of the share is distributed among small enterprises.

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