Oligopoly in the economy is what? The role of oligopolies in the modern economy of Russia

In most capitalist countries oligopolistic relations are typical for the market. Oligopoly in the economy is a kind of middle link that allows, on the one hand, to control all the largest enterprises and manage them, and on the other - to create in the future conditions for entry into a competitive environment. In any case, the topic is very relevant for Russia, because it is in our country that there are plenty of examples for studying.

What is the oligopoly

Let us consider in more detail how this type of market relations differs from the others. Oligopoly in a market economy is the meeting place for a small number of producers and a lot of buyers. As a rule, the number of firms does not exceed 10-12 units. The most interesting is that the oligopolistic market can have the features of both monopolistic and competitive, depending on the behavior of its main participants.

It should be understood that when there are only a few large players on the market, they have only two behavioral models: in the first they cooperate and together they solve price policy issues, and in the other they compete and consider each other as the worst enemies. In the first case we are talking about "secret agreements", when the leaders over a cup of coffee or in a steam room simply agree on what game to conduct. Price wars in the second model of behavior do not always benefit producers, but reducing the cost of products or improving its quality attracts new potential customers.

Characteristic features of the oligopoly

Oligopolies in the modern economy have their own specific features. There are only a few:

1. There are only a few leading companies on the market. Usually they occupy about the same share in such a way that their power can not be called a pure monopoly.

2. If we look at the graph, then the demand curve of each individual firm will have a decreasing nature, from which it can be concluded that the market is not competitive.

3. The main distinguishing feature is that any action from one of the producers will not be left without attention of competitors. If even the most important participant raises the price, his competitors will have to take similar actions or provoke demand for their products. In this case, unlike the competitive market, the behavior of customers is difficult to forecast. Oligopoly in the economy is always a push to improve the quality or reduce the price.

4. Often on the oligopolistic market, standardized products are produced. Thus, producers only have to play in price wars, since they can not change the quality or type of products. At the same time, another subtype, the differentiated oligopoly (for example, the automotive industry), allows large-scale races to be organized between producer firms for the attention of the consumer.

5. Any oligopoly can be characterized using the index of concentration of production. The higher the value of this indicator, the less competition in the market. The degree of concentration can be calculated using the Herfindahl-Hirschman index.

Features of entering the market

To a market in which there are only a few large manufacturers, it is very hard for young firms to enter. And this is not surprising. Oligopolies in the Russian economy have firmly consolidated their status, and their names appear on an international scale. As a rule, all industries that can be called oligopolistic are those where there are limited resources, complex technologies, large equipment.

It is clear that it will be very difficult for a young company not only to start an activity, because it requires colossal investments, but also to continue working at a competitive level. When the name "Lukoil" is widely heard, it will be difficult to surpass it. In world practice, there are only two examples of successful entry into the oligopolistic market of a new company. This is Volkswagen in the US and AvtoVAZ in Russia. And then, it was possible only with the condition of state support, so there is no question of normal competition here.

The oil production market in Russia

The role of oligopolies in the modern Russian economy can be clearly seen in the example of the oil production market. This is one of the most vivid examples of how several large players can pursue a policy of "secret agreements".

First, let's look at which companies appear in this market and which segment they occupy. For this we need the following figure.

As can be seen from this figure, only 11 companies in Russia produce almost 90% of the oil. Four of them own a 60% stake. They become the largest players, dictating their conditions. The distribution of production capacities in Russia is shown in the following figure.

What is happening in the market of petroleum products in fact

Oligopolies in the Russian economy, and in particular in the oil industry, behave like monopolists. In particular, there are vertically integrated systems that fully control the entire process from oil production, processing and to sale to end-users both on the external and internal markets.

As the antimonopoly committee notes, the activity of the main players in this market is by no means transparent. Theoretically, the price of oil products should be formed under the influence of many external and internal factors, but in fact it is significantly overstated, and as calculations show, gasoline could cost 20% less without damage to the producers. There is a secret collusion in which the main participants agree on the price and sell it on the domestic market.

The market of mobile operators in Russia

If we consider the role of oligopolies in the modern Russian economy, then another good example is the market for mobile operators. Competition here has long ceased to be exclusively price. For the right to attract the attention of the buyer, real wars are fought, sometimes even unfair competition.

Let's consider what the situation is and what players occupy the leading positions.

As can be seen from the picture, most of the market is held by the "big three", which includes MTS, VimpelCom (Beeline) and MegaFon. Recently, Tel-2 has been building up its turnover, although access to the most profitable sites of Moscow and St. Petersburg is still closed for him. As statistics show, over the past year there has been an outflow of customers from all operators by several percent. MTS decreased the number of customers by 0.1%, MegaFon by 0.3%, and by Beeline - by as much as 2.6%.

How does the oligopoly in the mobile operator market manifest itself?

"Big Three" controls almost the entire market of cellular operators. In their power, new technologies, such as 3G and 4G Internet. In principle, the place of oligopoly in the modern Russian economy is evident from the way operators behave. In 2006, the "big three" was implicated in a major scandal and was accused of colluding with regional operators. It was at that time that some small companies merged or completely disappeared.

In 2010, the Antimonopoly Service fined the largest market leaders for deliberately inflating tariffs for roaming services. Each company was charged a penalty, which amounted to 1% of their revenue received for their actions. The total amount of FAS revenues was 8.1 million rubles. It is only necessary to calculate how many billions of rubles were received by the companies themselves.

"Big Three" and "Tele 2"

In 2006, the Swedish operator Tel 2 appeared abruptly in the arena. It was formed back in 2001, but the persistent barriers to entry to the market prevented him from mastering him in the central regions. Thanks to the cunning manipulation of regional operators' shares, Tele Tel 2 managed to secure competitive advantages in 13 areas for only one year. Further, the company conducted a very aggressive pricing policy, which allowed it to win 4,3% of the market. It was a breakthrough that could not be overlooked by the main players of cellular communications.

"The Big Three" began to interfere in every possible way with "Tele2", and in the course were completely non-competitive methods. So, a request was made to the Ministry of Internal Affairs from one deputy, after which all the stations and offices of "Tele2" were carefully checked to see if they function correctly.

But the Swedish company did not retreat and the main goal was the conquest of the Krasnodar Territory. This "big three" could not admit, and they had to cut prices one and a half times to adequately resist the competitor. This example perfectly illustrates the role of oligopolies in the modern economy. Fair competition is not discussed at all, and if the new company wants to survive and consolidate here, one must have very strong support from either the state or from the more influential companies.

Oligopoly and its place in a market economy

All economists agree on a single point of view: oligopoly is needed by the modern world and a market economy. And although such a market is sometimes difficult to control, sometimes there are real wars against competitors, there are still positive sides for the formation of a sound economic system. Namely:

1. First of all, large firms have significant finances, which can be channeled to the development of the industry, scientific and technical developments.

2. From the first point it follows that once there is money and you can invest in development, then the goods will become more profitable for the buyer, and, thus, you can bypass the competitors. Oligopoly in the economy is the most powerful engine of progress.

3. In an area where there are only giants, there is no destructive power of competition, as in a free market. Here, low prices and high quality products are observed.

4. Another barrier is entry barriers. Only the well-funded firms can compete with the leaders.

Disadvantages of oligopolies

Virtually all the advantages are and are the negative moments that arise in the realities of the modern economy.

To begin with, the leading firms are completely not afraid of competitors and behave arbitrarily, doing whatever they want. The legality of their actions is confirmed by secret agreements, so that others act in a similar way. When colluding, they play with buyers, forcing them to buy low-quality products for a higher price. And people do not have a choice, because the oligopoly in the modern economy is akin to the monopoly: either buy, or stay (for example) without gasoline.

Although oligopolies can influence scientific and technological progress, and this is only possible by them, large firms are slow to introduce new technologies and invest in development. It is explained by the fact that again the company is in no hurry, because he knows: they will buy so. While all previously invested money will not pay off, nothing new will develop.

Consequences of market oligopolization

Negative attitude towards monopoly and oligopoly in the economy is clearly unjustified. Perhaps this is due to the fact that in our country there is too much mistrust and too many people who want to cash in with the money of ordinary people. But in fact, large-scale production in one industry is needed by the economy.

First of all, this is due to the scale of activity. It is reflected in constant costs. For small firms, almost all costs are variable. But in large industries, you can save on the implementation of some new technologies at the expense of scale. For example, the development of a new medicine will cost $ 600 million, but these costs will last for years until the problem is solved, and costs can be added to the cost of products already produced, and the price of this will not change much.

Conclusion

Oligopoly in the economy is a very powerful tool for the development of scientific and technological progress. If you correctly direct the channel along which you need to move, then all the shortcomings and negative sides that are observed in the present situation in our country will disappear.