Basic methods of economic regulation of the activities of a monopolist. Methods for regulating the activities of natural monopolies

State University- High School of Economics

Institute of Professional Retraining of Specialists

Department of Economic Theory

ABSTRACT

On the topic of: Goals and methods of regulating natural monopolies

Student: Seliverstova Lyudmila Sergeevna

Group No. 18EUP-1

Moscow, 2009

Introduction 3

1. Existing methods regulation in natural monopoly; 4

2. Goals of regulation of natural monopoly; 5

3. Methods of state regulation of activities are natural monopolies 6

3.1 Identification of market boundaries as a methodology for state regulation of natural monopolies; 9

3.2 Methodology for identifying market boundaries. 9

Conclusion; 12

Bibliography. 13

Introduction

The problem of monopoly in economics has been of interest to economists for almost the entire twentieth century. This topic has been and will remain relevant as long as there are global economic giants that firmly occupy a monopoly position in production.
Reducing the level of monopolization of the economy, creating and maintaining a competitive environment, and high-quality implementation of antimonopoly policy remain key tasks economic policy at the present stage. Of particular relevance is the problem of ensuring an acceptable combination of competition and monopoly for society, which determines the conditions and efficiency of business, the motivation of business entities, the formation and distribution of income, and, ultimately, the pace and level of socio-economic development.
In the conditions of modern Russia, the development and support of competition have become one of the key directions of economic policy. However, there are sectors in the economy where competition for objective reasons is impossible or ineffective (areas of natural monopoly). Meanwhile, the lack of effective competitive mechanisms and the threat of abuse of economic power by subjects of such monopolies forces the state to create a special regulatory system in the field of natural monopolies, aimed at achieving a balance of interests of consumers and subjects of natural monopolies, ensuring the availability of the goods they sell to consumers and the effective functioning of subjects of natural monopolies.

The work is written on the basis scientific works and articles in the field of economic theory.

Purpose: To consider existing methods of regulation in a natural monopoly.

The subject of the study is the goals and methods of regulating natural monopolies using the example of Russia, the USA, Great Britain and other countries.

The abstract discusses:

· application of the Federal Law “On Natural Monopolies”, some methods of state regulation of the activities of natural monopolies are outlined;

· methods for identifying and highlighting market boundaries, as well as the goals of state regulation of natural monopolies.

1. Existing methods of regulation in a natural monopoly

There are cases in an economic system when a monopoly becomes more effective than competition. This case is called a natural monopoly, i.e. when one firm can produce enough of a product to supply an entire market at a lower cost than two or more firms could. This concept contains a contradiction, the resolution of which is the task of state socio-economic policy. Indeed, on the one hand, the existence of such goods is recognized, the production of which is most efficient in a monopoly market, and, on the other hand, in the absence of competition, a single producer can abuse his position in the market in order to maximize his profits. Moreover, as shown in theory, the selling price of products chosen by the monopoly to maximize its profits is always higher than the competitive price, and society as a whole suffers losses. In this situation, the state must regulate the activities of a natural monopoly in such a way as to, without allowing the monopolist to dictate its terms to consumers, at the same time give it the opportunity to successfully function and develop.

In a broad sense, regulation can be defined as the intervention of government bodies in the operation of market mechanisms in order to adjust the behavior of market agents, and therefore the results of the market.

Ideally, the state regulates only in cases where the functioning of the market as such produces unsatisfactory results. It is assumed that the benefits of government intervention outweigh all associated costs, that is, the benefit/cost ratio from regulation exceeds one where:

· A competitive resolution of the issue is impossible - this is a situation of natural monopoly;

· Competition exists and produces relatively effective results, but due to certain problems with market participants and types of activities, effective results may be undesirable (subject to government regulation);

For example, competition may “decide” that providing transport services to remote, sparsely populated areas is unprofitable and cancel these routes. Efficiency will be achieved, but equality and justice will be violated. And efficiency is not the only goal. Economists are sometimes shy about the goals of “fairness” and “equity,” believing that if transfers are to be made, it can be done through tax levers or lump-sum payments. But since such events themselves require certain costs, the decision cannot be so simple and unambiguous. Transaction costs play a significant role.

· A competitive solution is possible, but ineffective due to externalities or information asymmetries (subject to government regulation).

One of the developed forms of regulation is regulation that corrects external effects (externalities), which are the cause of the breakdown of the normal “competition-efficiency” relationship. Many industrial activities generate externalities that are negative for the wider community. For example, power plants running on fossil fuels emit harmful emissions into the atmosphere, followed by oxide rain. It turns out that the marginal social costs of such production exceed the marginal costs of a particular firm. In many cases, the producers of harmful externalities themselves are ready to adjust their activities in order to minimize externalities. Companies don't often show this level of awareness.

The government does not seek to make all markets perfectly competitive, but rather attempts to eliminate serious market imperfections. It creates an environment where competition is encouraged rather than monopolism, where the first behavior is more profitable than the second. Thus, antimonopoly policy is an instrument of administrative regulation of the economy, in order to prevent violations of economic equilibrium or socially undesirable changes, its main points are:

· Protection and promotion of competition;

· Control over firms that have a dominant position in the market;

· Control over prices;

· Protecting the interests and promoting the development of small and medium-sized businesses.

Regulation may take various shapes. The key distinction is between direct and indirect regulation. Direct regulation includes any measure or action directly aimed at a market agent (or group of agents), while indirect regulation covers anything that affects economic and market conditions, common to all actual and potential participants.

2. Goals of regulation of natural monopoly

The primary goal of regulation is to eliminate inefficiencies without creating new distortions. Regulation exists to facilitate the implementation of public policy goals, among which, in the natural monopoly industries under consideration, the following are of paramount importance:

· Economic efficiency;

· Reliability of supplies;

· Social goals (social justice, equality);

· Environmental protection objectives.

The goal of government regulation is to achieve desired results for consumers when competition cannot be relied upon. If the regulatory body had enough information about the regulated company, then disputes about methods of setting prices for the products of a natural monopoly would disappear by themselves (it would be possible to easily force the monopolist company to produce the desired quantity of products at optimal prices, using the best combination of factors production). But since it is often impossible to establish the firm's marginal cost function due to opposition from the regulated, the task of officials becomes to encourage it to produce the socially necessary volume of output without denying the opportunity to obtain the much desired profit. And this is not at all easy. The theory of regulation aims to create a mechanism for influencing a natural monopoly that would allow it to achieve optimality. But to do this, you first need to find the best combination of price and output, and then propose a plan of action that will allow you to achieve this combination. The purpose of state legal regulation is to maintain or establish a balance between the interests of consumers and the interests of subjects of natural monopolies, to streamline their activities by introducing rules of conduct.

3. Methods of state regulation of the activities of natural monopolies

The problem of the need to regulate natural monopolies was recognized by the state only in 1994, when rising prices for the products they produced had already had a significant impact on undermining the economy. Therefore, in Russian Federation The Federal Law “On Natural Monopolies” was adopted on August 17, 1995, which defined the industries related to natural monopolies and the scope of their regulation. Currently, three largest natural monopolies have formed in Russia: RAO Gazprom, OAO Russian Railways and OAO RAO UES of Russia. According to the Law "On Natural Monopolies", the scope of regulation includes the transportation of oil and petroleum products through main pipelines, gas transportation through pipelines, services for the transmission of electrical and thermal energy, rail transportation, services of transport terminals, ports and airports, public and postal services

communications. Analysis of the results of application of the Federal Law “On Natural Monopolies” allows us to highlight some methods of state regulation of the activities of natural monopolies.

The most common three methods of regulation in a natural monopoly are:

· Direct government regulation (opportunities and boundaries);

· Bidding for a franchise (possibility of use and effectiveness in various conditions);

· Price discrimination (organizational and economic aspects).

Let's consider direct government regulation: Most often, the mechanism and boundaries of such regulation are determined by national legislative acts. Direct government regulation by determining tariffs or having a decisive influence on them for natural monopolists is a fairly simple and understandable way to reduce the role of negative factors existing in their activities. In Russian legislation, this method is given priority attention. However, when implementing this approach, a number of problems arise:

· the need to create a body of state control over the activities of a natural monopolist or to assign such functions to an already existing anti-monopoly structure. This carries the threat of replacing public interests with the interests of ruling groups, not to mention the corresponding costs of maintaining government officials;

· the difficulty of accurately determining the real costs of a natural monopoly service provider.

Speaking of bidding for a franchise, we will deal with contract system as a form of economic organization. The contract is concluded with the manufacturer ( economic entity), which offers better conditions (lower price, greater range of services, etc.). Should we expect that the contract system will solve the problem of natural monopoly once and for all? Of course not.

In the first case, the prerequisites are created for the emergence of a private unregulated monopoly with the establishment of a high monopoly price, which has to be paid by society as a whole (we are dealing with the direct social harm of the monopoly. In the second case, all the shortcomings of the administrative, and not economic system, where processes of politicization of solutions to problems of natural monopolies take place (in the interests of the state and the ruling elites, but not in the interests of society as a whole).

The phenomenon of natural monopoly is no exception, therefore bidding for a franchise in the regulation of natural monopolies acts as one of the equally probable options for action. The authors generally agree with the conclusions of O. Williamson, made on the basis of studying the American experience of using bidding for a franchise (for Russia this is most likely “exotic”). Franchise bidding has allowed the United States to solve problems with some natural monopolies, and in a better way than other methods of regulating them. This applies to the deregulation of trucking, to the organization of the work of local airlines, the postal service, to the work of cable television networks, in some cases to the work of public utilities, to the problem of deregulation railways.

Speaking about natural monopolies, we cannot ignore another way to regulate them - price discrimination .

Natural monopolies often resort to price discrimination to maximize their net income. To do this, they segment the market. An example of such an approach would be the practice of establishing

higher tariffs for electricity, gas, communication services, utilities for enterprises and organizations and, accordingly, reduced tariffs for citizens.

It is also possible to apply multiple tariffs depending on the time of provision of services (communications, electricity, railway and air tickets, etc.). However, this same mechanism can be used not only by a natural monopolist, but also by the state, which seeks to alleviate the burden associated with the monopoly. It can set lower tariffs for social

specifically vulnerable groups of the population (pensioners, disabled people, etc.). For example, the practice of preferential tariffs for various types of services provided by natural monopolists is widely used. What is important here is the source of coverage of these benefits. However, very often in Russia it is either not determined, or without appropriate calculations, without reason, it is shifted to the manufacturer. The most common example is benefits for utilities. By now, the number of “beneficiaries” is already comparable to the number of people, there are no benefits

having. This contributes neither to the stabilization of the social situation nor to the normal reproduction of the capital of a natural monopolist enterprise.

The practice of using price discrimination can be applied by the state not only in the case of direct state regulation of a natural monopoly, but also in the case of bidding for a franchise. Thus, price discrimination becomes a “double-edged sword” that can be successfully used by both a natural monopoly and the state to achieve their goals. As a result, a certain “balance of interests” arises, and the severity of the problem

on the part of the natural monopoly it is softened (smoothed out, removed).

In reality, state control over natural monopolies consists both in state ownership of a controlling stake and in the existence of special antimonopoly legislation regulating methods of tariff regulation and control over the activities of natural monopoly entities, as well as determining the list of consumers subject to preferential or mandatory services. Russian legislation, aimed at regulating natural monopolies, provides not only for state tariff regulation, but also for limiting their disposal of property (primarily, which they received as a result of privatization). At the same time, if the enterprise is not state-owned, then its regulation is reduced to the following: either prices are set at the level of the average costs of the monopoly, or two-component tariffs are applied, providing for a separate and fixed fee for access to receiving services, as well as payment for each unit of paid services.

3.1 Identification of market boundaries as a methodology for state regulation of natural monopolies

Let's try to formulate the basic methodological principles of state regulation of natural monopolies.

As a result of identifying the boundaries of the market, the following definition can be given.

A natural monopoly as an object of state regulation is a sphere of economic activity where competition or economically ineffective, or impossible due to the specifics of the technological process of production of goods (services), or contrary to the interests of society (state).

Such a definition clearly reflects the objectivity of state regulation of natural monopoly.

Moreover, how to distinguish a natural monopoly from a monopoly in general?

Main sign The natural monopoly is the indivisibility of the infrastructure, from which its other characteristics follow:

· subadditivity of costs;

· homogeneity and irreplaceability of products;

· endogeneity of the structure of industry companies as vertically integrated;

· social (public) significance.

A natural monopoly as an object of government regulation is divided into a natural monopoly core, identified on the basis of the economic and technological boundaries of the market, and an adjacent natural monopoly segment, allocated based on the social and strategic boundaries of the market chosen by society. It is fundamentally important that a natural monopoly also includes areas that are potentially competitive, but limited by society.

3.2 Methodology for identifying market boundaries

The above analysis of the Russian legislative framework illustrates the imperfection of the definition of natural monopolies, which leads to the ineffectiveness of the choice of government regulation instruments. In our opinion, the methodology for identifying natural monopolies should be based on the identification of such sectors within a multi-product industry where competition is impossible and/or ineffective. Let's call it market boundaries, among which we highlight:

economic;
technological;
social (public);
strategic.

Economic the theory assumes that an industry is a natural monopoly if, at all levels of output, the cost function C(q) is subadditive, i.e. inequality holds. This means that if n firms collectively produce output q, then their total costs of producing the entire output will always be higher than the costs of one single firm producing the entire output q.

In a strictly theoretical approach, the economic boundaries of the market outline only the infrastructure segment, which became the basis for a liberal approach to natural monopolies and their reform. Purely economic approach without taking into account the specifics of the industry, in our opinion, does not fully reflect the essence of a natural monopoly and its role in the development of society. Such total liberalization is as extreme as a planned economy. Purely economic principle identification of the natural monopoly sector is the main drawback of the modern theoretical paradigm in the study and regulation of natural monopolies.

Technological frontiers determined by the impossibility of competition due to the technical and production characteristics of the industry . In each infrastructure industry, the technological boundaries of the market are distinguished differently due to the technological characteristics of the industries. But it is precisely the identification of the technological boundaries of the market that allows us to say whether direct government regulation should be limited to the infrastructure segment, as a natural monopoly core, or whether the boundaries of the free market should be narrowed.

Social (public) boundaries must be allocated based on the principle of social utility (significance). Products of the natural monopoly sector are present in the cost of almost all goods and services. Low prices on the products of infrastructure industries are one of the most significant competitive advantages of the Russian economy. Moreover, the goods (services) of natural monopolies are directly consumed by the population. This determines special role natural monopoly segment for the state and social life. Recognition of the social (public) function of natural monopolies will make it possible to identify those areas in which, due to social significance, competition may be impossible and even dangerous, and prices should be regulated, and in some cases subsidized by the state. This mainly concerns areas serving the population. For example, in no country in the world, except Japan, has rail passenger transportation become profitable, and all developed countries subsidize it. The regional gasification project is also impossible either without the participation of the state or without the existence of the monopoly of OJSC Gazprom, since in a competitive environment it is unlikely that any of the companies will take on these functions. In the electricity industry, competition in the retail market can generally be dangerous. Energy supply stability is an issue national security. And any “imperfection” of the market in the electricity industry due to the impossibility of storing electricity can have much more serious consequences for society than in any other.

Strategic boundaries are close to social and also outline areas where competition should be limited due to strategic (political or geopolitical) reasons. This delineation is by no means the creation of a monopoly market in traditionally competitive industries, as representatives of ultra-liberal ideas are trying to prove. For industries in the natural monopoly sector, a vertically integrated organization of economic relations in the industry is more “natural.” The principle of endogeneity of the structure of natural monopoly industries is expressed in the fact that the division of a natural monopoly industry into competitive and natural monopoly activities is an artificial process, as a result of which a vertically integrated company is again formed.

For example, after the electricity reforms carried out in the UK (one of the most liberal electricity reforms was carried out in the UK), it was necessary to “return to the point of departure” - generating companies were allowed to participate in the privatization of distribution companies. As a result, vertically integrated companies emerged that not only produced electricity, but also distributed it. Creation of vertically integrated companies, incl. mergers with fuel companies are a key trend in all liberalized energy markets. It follows that hasty and artificial division of energy companies, not determined by the market, ultimately only leads to “reverse” consolidation.

Taking into account the above, we can conclude that the division of the natural monopoly industry by separating the monopoly core itself is premature. Practice shows that in many cases, after the actual division of a natural monopoly into areas of activity, a reverse process was subsequently planned.

CONCLUSION

Without a doubt, it is the efficiency of the functioning of natural monopolies that can determine the competitiveness of the Russian economy in international markets, not to mention the infrastructure support for the entire life of the country. And it was precisely the discrepancy between the structures of natural monopolies and the system of their state regulation with the achieved degree of development of market relations, as well as the conditions for integration into the world economic space, that determined the need for their reform.
Antimonopoly legislation should be reasonable and thoughtful, and its application by employees of regulatory agencies should be a regulatory mechanism of the market, but nothing more, since an overly strict implementation of antimonopoly policy can lead to a large imbalance in the existing market relations and cause dissatisfaction on the part of employees of large firms.

LITERATURE

1. Federal Law of the Russian Federation “On Natural Monopolies” dated August 17, 1995 No. 147-FZ;

2. Akulov V.B, Rudakov M.N. "Organization Theory" textbook. Petrozavodsk: PetrSU, 2002;

3. Korolkova E.I. HSE Economic Journal No. 2 2000 Lectures and teaching materials “Natural monopoly: regulation and competition” p. 235-236, 242-243;

4. Ivanov I.D. Modern monopolies and competition. - M.: Mysl, 1990, p. 89.

5. Fischer S., Dornbusch R., Schmalenzi R. Economics. M. - 1993. - S. 28-29:

6. Encyclopedia of interesting articles from the Excelion.ru portal.

7. http://articles.excelion.ru/science/em/47067409.html

8. FINANCIAL ANALYTICAL CENTER http://lib.mabico.ru/589.html

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" Methodsstateregulationnaturalmonopolies"

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Content

Introduction
Conclusion

Introduction

There are a very large number of different market conditions, which allows us to talk about the imperfection of markets and consider the fundamental monopoly as a prerequisite for this imperfection.

The country, while guaranteeing support for competition (Article 8 of the Constitution), provides this guarantee by establishing a ban on carrying out economic activities aimed at monopolization and dishonest competition. Such a prohibition is consistent with the provision of Part 3 of Article 17 of the Constitution, which states that the embodiment of the rights and freedoms of man and citizen cannot violate the rights and freedoms of other persons. The definition of public law principles in regulation, namely, issues of competition, is considered a required condition for creating a civilized market.

In the economy of the Russian Federation, in a number of markets for goods and services related, for example, to gas transportation through pipelines, railway transportation, services of road transport terminals, ports, airports, a situation has developed in which satisfying demand in these markets is more successful in the absence of competition due to the distinctive features of production. After all, goods produced by subjects of this activity cannot be replaced in use by others, due to which the demand for them is less dependent on price changes than the demand for other types of goods. Therefore, regulation of natural monopoly is relevant today. The purpose of the study is to study methods of state regulation of natural monopolies. In accordance with the goal, the following tasks were set:

Consider the essence of natural monopoly

Consider government regulation of natural monopoly

Consider the features of state regulation of natural monopolies in the Russian Federation

The object of the study is the system of state regulation of the activities of natural monopoly in Russia

The subject of the study is the economic relations that arise between enterprises and organizations under conditions of natural monopoly.

1. The essence of natural monopoly

1.1 Concept and types of natural monopoly

A natural monopoly is a market situation where one enterprise is the only producer of a product that has no close substitutes. This type of monopoly is called a natural monopoly because in this case, barriers to entry are based on features of technology that reflect the natural laws of nature, rather than on property rights or government licenses. In this case, forced dispersal of production across several enterprises is inappropriate; it would lead to increased costs.

Consider the city water supply. By laying two pipe systems parallel to each other, it is possible to ensure that neighboring houses and even neighboring apartments in the same building, at the choice of residents, can be connected to either of the two water supply companies. Competition has become possible, but at the cost of a significant increase in the cost of each liter of water delivered to the consumer. Other examples of natural monopolies are electrical networks, wired telephone communications, centralized heating, and city sewerage.

The situation of a natural monopoly is shown in Fig. 1. Here LAC and LMC are the long-term average and marginal cost curves, D is the demand curve, MR is the corresponding marginal revenue curve. The optimal output and price (Q 1 , P 1 ) are determined by the intersection of the LMC and MR curves. The monopolist's profit in this case will be an amount equal to the area CP 1 AB.

The situation of natural monopoly

The subject of a natural monopoly according to the Federal Law of August 17, 1995 N 147-FZ “On Natural Monopolies” is an economic entity ( entity), engaged in the production (sale) of goods under conditions of a natural monopoly (Clause 3 of Article 3 of the Law on Monopolies). Federal Law of August 17, 1995 N 147-FZ “On Natural Monopolies”.

A natural monopoly has characteristic features. The first and main feature is the single seller. One company is the only manufacturer of a given product or the only provider of a service; A monopolist is an industry consisting of one firm. Therefore, such a company and industry are synonymous.

The next most important feature is the absence of substitutes for this product. The product of a natural monopoly is unique in the sense that there are no good or close substitutes. Such monopolies include gas and electric firms and companies, water supply and communications enterprises.

Also characteristic feature significant price control exercised by the monopolist. The reason is obvious: the monopolist produces and, therefore, controls the total volume of supply.

Another important feature is that entry into the industry is blocked. Barriers to entry into the industry, which are very significant in short term turn out to be surmountable in the long term.

And the last no less important feature is the low elasticity of demand, since the demand for products or services produced by natural monopoly entities is less dependent on changes in cost than the demand for other types of products (services), since they cannot be replaced by others goods. These products satisfy the most important needs of the population or other industries. These goods include, for example, electricity. If we propose that an increase in car prices will force almost all buyers to categorically refuse to purchase a personal car, and they will begin to use public transport, then a significant increase in electricity tariffs is unlikely to lead to a refusal to use it, since it is difficult to replace it with an equivalent energy source .

A natural monopoly is also characterized by high initial capital investments and high fixed costs. Not every entrepreneur is able to make such investments and such fixed payments. It is important to note at the same time that a natural monopoly has extremely low marginal costs. Kostenko M.A. Commercial law: textbook. allowance. - Taganrog: TTI SFU, 2010.

Natural monopolies can be of two types:

Natural monopolies The emergence of these monopolies occurs as a result of barriers to competition established by nature itself. For example, a company whose geologists have found a deposit of unique minerals is ready to become a monopolist. If she buys despite all this land plot, where the deposit is located, no one else will be able to use it. The law protects property rights, including when they lead to the creation of a monopoly. However, regulatory intervention by the state, including under these criteria, is not excluded.

Technical and economic monopolies. This is a relative name for monopolies, the origin of which is due to either technical or financial reasons associated with the manifestations of economies of scale. For example, it is unlikely that there will be two networks of water supply, gas and electricity supply to houses in a metropolis. In other words, it is technically possible to do this, but it is irrational from a technical and financial point of view.

Also natural monopolies in territorial space: federal, regional, local or municipal.

Particular attention should be paid to local natural monopolies, since they are the most common type of natural monopoly. It represents such a state of local commodity market, in which demand is met more successfully by one manufacturer. The restriction of the competitive environment is fairly due to the scientific and technical distinctive features of production or the socio-economic criteria of the administrative region, similar to the geographical boundaries of this local commodity market.

1.2 The need to regulate natural monopoly

The need to regulate the situation of natural monopoly has a long history. The concept of natural monopoly was pioneered by John Stuart Mill (1848), who emphasized the problem of unnecessary (resource-wasting) duplication of transmission networks that can occur in public sectors. Leon Walras developed the connection between natural and regulated as applied to the construction and operation of railways. The premise that regulation served the purpose of maintaining the efficient functioning of large-scale production by controlling the market was part of the so-called "progressive public interest" concept, which was fully applied to regulation public sectors XX century.

Traditional regulation of natural monopolies has a hundred-year history. It originated at the turn of the 19th and 20th centuries and expanded significantly in the 1930s. and until the 1960s. was used quite successfully.

Predominantly during this period, it was assumed that the purpose of regulation was to ensure socially desirable results in all cases where competition could not be relied upon to achieve them. Regulation through direct intervention in economic processes replaces the “invisible hand”; the so-called “visible hand” operates. Nosova S.S. Fundamentals of Economics: textbook. - M.: Knorus, 2012.

In the economy of the USSR, all prices were set in a planned manner, and resources were distributed centrally, as a result of which there was almost no special allocation of economic sectors related to natural monopolies. The transition to a market economy necessitated the introduction of certain methods of regulating natural monopolies. This need is caused by a number of reasons.

In countries with developed market economies, the modern concept of regulation of natural monopolies implies that the use of government regulation is considered justified when a specific product (service) is produced by a single economic entity, provided that the condition is met that competition between similar enterprises is impossible due to technological or economic reasons, and the increase in production volume of a single entity will be accompanied by a decrease in unit costs

Despite the technical efficiency of concentrating production in the hands of one enterprise, market practice reveals many facts of abuse of a monopoly position in the form of inflated costs or inflated profits, which negates the social effect of economies of scale due to the dictates of unreasonably high prices. With all this, similar abuses are often very difficult to recognize from the outside due to the fact that the current state of affairs of the monopolist is usually considered to be carefully concealed information.

Due to the fact that natural monopolies usually create products necessary for the normal functioning of most enterprises and a fundamental significant part of the resources they use, non-payments for the products of natural monopolies result in a crisis of non-payments within the country's economy. The spread of non-payments is the result of price discrimination against natural monopolies and other economic structures who have influence in the market and are not constrained in their own activities by the regulatory influence of the state.

The need to regulate prices in natural monopolies is not so much due to the negative consequences of monopoly behavior. There is also the opposite point of view: reasonable differentiation of prices for the products of natural monopolies has the opportunity to serve as a strong instrument of the country’s economic policy, allowing to regulate the economic activity of various sectors of the economy and level out its seasonal fluctuations. In other words, the mechanism of influencing the economy through a system of regulated prices is considered an effective addition to fiscal macroeconomic policy.

natural natural monopoly Russian

2. State regulation of natural monopoly

2.1 Non-price methods of regulation

Over the course of many decades, the state has developed measures to regulate the activities of natural monopolies, built mainly on the principles of direct control using pricing and non-pricing devices. price regulation.

Let's consider non-price methods of regulation. One of these methods is for authorities to initiate competition for a market where competition within the market is impossible or burdensome due to the presence of significant economies of scale. Regulatory authorities hold an auction and grant, for a certain period of time, the right to serve (English franchise) the market to the enterprise that undertakes to contribute the largest amount to budget revenue. This type of market competition is sometimes called Demsetz competition, referring to the American economist who first described it. In this case, the volume of output will probably be Q 1 at price P 1 (Fig. 1), however, part of the profit received by the monopolist will be transferred to the budget as payment for the right to serve the market. Other than that equal conditions The greater the number of enterprises competing for this right, the more part of the profit can be withdrawn to the budget. The disadvantage of this method of regulating a natural monopoly is the “too small” volume of production.

An example of competition for the market could be, for example, the creation in St. Petersburg of alternative services involved in the operation and repair of housing stock. The first competition for the right to provide such services, in which 24 firms took part, was held in 1996. The emerging threat of substitution will stimulate the work of municipal services. Galperin V.M., Ignatiev S.M., Morgunov V.I. Microeconomics vol. 2: textbook - St. Petersburg: “ Economic school", 2009.

The next method is to separate the natural monopoly sector into a separate company. The essence of the method is to isolate the natural monopoly link of the monopolist into a separately functioning company with its own management and owner. In accordance with this, the newly emerged company has independent financing from sources of income (providing services for the transportation of electricity and coolants), as well as costs for repairs and re-equipment of key production assets. Another part of the monopoly, which is potentially competitive, goes to federal market and competes with other manufacturers.

This method of regulation is more in the nature of structural reforms, but not regulation, although in domestic conditions this measure becomes a full-fledged non-price method of regulation. This is confirmed by the creation of a new structure of economic relations of a monopoly (in general, the emergence of several small ones from one company, in particular the separation of a natural monopoly and competitive sector), in fact, in terms of the degree of impact, it is inherent exclusively in non-price methods of regulation.

Thus, in the Russian Federation, on April 1, 2010, a new carrier began operating - JSC Federal Passenger Company (FPK) as a branch of JSC Russian Railways, responsible for the field of passenger transportation. With all this, it distinguishes 2 sectors of work - competitive and public (regulated), which differ in the principles of doing business.

In general, this method can be considered promising for use in financial practice, although in domestic conditions one should take into account the likely negative consequences due to the resulting technical structure of production, for example, in the energy supply sector.

There is also another non-price method - quality control of natural monopoly goods. This type of non-price methods of regulating natural monopolies is based on the traditional premise that all goods and services are required to have a certain standard of quality in production and final release. For example, the production of pipes for the gas transmission system must meet strength standards (pressure, corrosion resistance, diameter, metal alloy, etc.), and failure to comply with these requirements may result in consumers refusing to purchase the product and losing a buyer.

This method of regulation is considered quite labor-intensive from a technical point of view and requires investment of funds from consumers, the state, or the monopoly (for example, installation of equipment). Obviously, the issue of who is obliged to bear the costs associated with the installation of equipment can only be decided by the authorities, but not by the monopolist itself or the final buyer. With all this, when resolving this issue, it will be necessary to proceed from the current Russian realities and, in particular, to take into account the low standard of living of the majority of the population of the Russian Federation. Zhuravleva G.P. Economic theory. Microeconomics-1,2: textbook - M.: "Dashkov and co", 2010.

The actual use of the method will make it possible to create the prerequisites for the correct behavior of the monopolist in relation to the final consumer, who will have a real chance to control the quality of the product he uses.

It is customary to highlight another non-price method - mandatory servicing of certain consumer groups.

The content of the method is quite precise: a natural monopolist company is obliged to provide services to certain groups of buyers in the absence of accounting for timely payment for services provided. A specific category of consumers in Russia includes all facilities that support state security (military units, premises of law enforcement agencies, etc.), as well as socially important vital facilities.

The effectiveness of this method is not questioned, because we are talking about state security and its implementation in all probable cases, regardless of the one-sidedness of the application. In the short term, only the buyer receives the benefit; in the long term, the whole society benefits.

The introduction of this non-price method of regulation reflects in many ways the features of a transitional state of the economy, which the Russian economy is at this moment. Obviously, in countries with developed market economy, there are no problems with a well-functioning security system. The duration of application of this method of regulation in the conditions of the Russian economy is determined by the following conditions: the end of the transitional nature of the Russian economy, the strengthening of its market nature; improvement economic situation budgetary sphere and welfare of the population.

2.2 Price regulation methods

The price method of regulating natural monopolies is the establishment of prices or marginal tariffs for the companies' products.

One of the price methods for regulating a natural monopoly is Ramsey pricing. In order to prevent losses and approach the competitive effect, the price that the government sets for the product of a natural monopolist is guided by average production costs.

This price is called the “Ramsey price” after the economist who proposed a similar pricing method. Mathematically it can be represented like this:

(P i -MC i) /P i = k/e i ,

where P i is the price of product i;

MC i is the marginal cost of production of product i;

e i is the elasticity of demand for product i at its price;

k is a constant (selected so that the break-even condition is satisfied).

The same rule can be formulated differently if we know the optimal volumes of output of all products of a natural monopoly, i.e. volumes that satisfy demand, set by prices equal to marginal costs. These volumes serve as a reference point. The rule is formulated as follows: reduce the output of all products in the same proportion until total revenue equals total costs. Esipova V.E. Prices and pricing: textbook. - St. Petersburg: Peter, 2009

Ramsey's Rule can be seen as a theoretical basis for setting prices according to the value of a service. The practice of setting freight railway tariffs in accordance with this pricing principle has long been known abroad. In Russia, almost in accordance with this principle, in August 1995, differentiation of tariffs for rail freight transportation by three classes of cargo was introduced.

The next method of price regulation for a natural monopoly is peak demand pricing. This method is used when some types of products must be consumed immediately during the production process; they cannot be stored and, therefore, stocked. At the same time, the demand for these products, as a rule, fluctuates significantly over time.

Due to the fact that products cannot be stocked and demand for them fluctuates over time, the production capacity of a natural monopoly is unevenly loaded. The readiness of enterprises to meet demand during periods of peak growth is ensured by the cost of maintaining production capacity, which are not used at other times.

The use of such pricing, in which relatively higher prices for products during periods of peak-load pricing alternate with low prices in other periods, makes it possible to reduce the attractiveness of off-peak consumption, which significantly improves the use of production capacity over time.

Let's take the electric power industry as an example. Peak electricity demand pricing in Russia would mean that electricity tariffs would have to be higher in winter than in summer, and higher during the day and evening than at night. This is the case in many countries around the world. In our country, electricity tariffs still vary by season, inversely depending on capacity utilization: in winter they are lower than in summer, and, as a rule, they do not differ by time of day. Domestic practice Pricing to date is based on accounting rather than economic ideas about costs.

It is clear that such pricing encourages consumers to consume electricity unevenly, which causes significant differences in the utilization of production capacity and an increase in the cost of electricity.

Another method of price regulation of a natural monopoly is to set prices at the level of marginal production costs. Such prices will be low due to the nature of the marginal costs of a natural monopoly. Low prices will stimulate producers who consume electricity, gas, communications, water, etc. At the same time, the welfare of individual consumers of these products will grow. Moreover, prices at the marginal cost level imply allocative efficiency, which promotes the smooth functioning of the economy as a whole and best meets the needs of society.

An equally important method of regulation is control over the level of profitability. Establishing a maximum rate of return compared to an unregulated natural monopoly leads to a decrease in price and an increase in sales volume. From the point of view of society, limiting the rate of return leads to an increase in welfare.

Rate of return regulation is believed to have significant spillover effects on the investment decisions of the regulated firm. By maximizing profit in conditions of limited state-regulated return on capital, the company seeks to substitute capital resources for other used factors of production. There is so-called overinvestment. The use of more capital-intensive production methods than would prevail in the absence of regulation, in turn, raises average costs above the minimum possible level. This is the Averche-Johnson effect.

Regulation of the rate of return leads to an increase in social welfare due to an increase in sales volume and a decrease in the price of a natural monopoly product.

However, state pricing at the level of a socially fair price would lead to an even greater increase in welfare compared to regulation of the rate of return.

In addition to increasing social welfare, regulating the profitability of a natural monopoly leads to a change in the proportions of resource use: the firm makes a choice in favor of a more capital-intensive production method. Firms choose technology that does not ensure efficient allocation of resources. The condition of equality of the marginal rate of technological substitution of labor with capital to the relative price of labor is not satisfied.

Intuitively, the Averch-Johnson effect is explained by the fact that limiting the rate of return increases the interest of firms in increasing output primarily through the use of capital resources, which allows, under appropriate conditions, to increase the total amount of profit much faster than the growth in the return on capital used.

The effect of the Avercha-Johnson effect is stronger, the higher the elasticity of substitution of labor with capital for a given production function and the lower the price elasticity of demand for the company's product. High elasticity of substitution makes it easier to change production technology; low price elasticity of demand makes it possible to shift growing costs per unit of production to buyers of goods.

Thus, the negative consequences of monopoly power force the state to take measures to regulate the company, even if it is an industry of natural monopoly.

3. Natural monopolies in the Russian Federation

3.1 Features of natural monopolies in Russia

Natural monopolies in the Russian Federation are considered the main, basic component for the entire economy of the country. On the one hand, this is explained by the geographical remoteness of the subjects of production and use within economic complex. Looking at it from a different angle, the structure industrial production In the Russian Federation, products of low degrees of processing dominate, the costs of creating which are dominated by the costs of services of natural monopolies.

The peculiarity of Russian natural monopolies is that they are enormous in size and vitally important for the functioning of the entire Russian economy. Today in the Russian Federation there are 3 main natural monopolies: Gazprom, RAO ES, Russian Railways. And mechanically dividing them into parts in order to create competition in these industries would do more harm than good. The task of regulating these monopolies is to find a form of their functioning in which the elements of monopoly and competition are organically combined. In the meantime, the unreasonable rise in prices and tariffs in recent years allows natural monopolies to increase costs without caring about increasing efficiency. Payment and settlement relations with consumers of products and services of natural monopolies have not been regulated. As a result, this area has become one of the sources of non-payments, and high prices for the monopoly’s products limit the development potential and competitiveness of Russian industry.

Instruments for regulating natural monopolies in Russia can be divided into three groups: direct pricing for the products of natural monopolies; indirect price regulation through the establishment of profit or profitability limits and the use of competitive mechanisms to transfer rights to produce products (render services) under conditions of a natural monopoly.

In Russian conditions, natural monopolies deserve close attention from the state, which is due to the following interrelated economic reasons.

The first reason is that Natural monopolies are a more stable functioning sector of the economy. They form the basis of gross internal product countries (GDP). The growth or decline of this most important indicator of the financial well-being of society depends on how effectively these sectors of the economy operate. A shift for the worse in the production and economic results of these sectors of the economy can lead to a crisis in the country's economy.

The next reason is that in the Russian Federation there are natural monopolies - these are budget-forming sectors of the economy. Share net profit JSC Russian Railways currently accounts for only 6% of the total amount of taxes transferred to the budget, however, for example, in Gazprom this figure reaches 45%. http: //www.gazprom.ru/ In conditions of budget shortages, the government is interested in creating incentives to maintain the monetary position of these industries in order to be able to receive constant revenues to the budget.

And an equally important reason is that the imperfection of regulatory mechanisms leads to a redistribution of profitability to the benefit of natural monopolies. Due to their own monopoly power, these sectors of the economy tend to charge a higher price than a purely competitive company with the same costs would do.

And the last reason is that natural monopolies are cost-generating sectors of the economy; as a result, the level of prices and tariffs for their products and services affects the uniform level of tariffs. The inflationary potential of the economy is increasing: rising costs lead to a lack of investment necessary to strengthen reproduction. The need to compensate for this deficit contributes to rising prices.

Climatic severity predetermines the considerable “energy intensity of life” in the Russian Federation. The role of natural monopolies here is not limited to the creation of joint production conditions and the formation of basic characteristics financial growth: they are considered the most important factor in life support, and sometimes survival. This data specifically determines the scale of the country’s economic activity in these sectors of the economy.

3.2 Reform of natural monopolies in the Russian Federation

The economic development of Russia requires the reform of natural monopolies, primarily in the electric power, gas and railway industries. Without this, it is impossible to solve the problems of attracting investment in these industries to compensate for retiring capacities and increase the supply of services in a period of increasing economic growth demand for them. Restructuring of natural monopolies is also the basis for reducing costs for consumers and their services. A compromise must be reached economic interests between strengthening the financial and economic position of these industries, necessary to reliably satisfy the effective demand for their services, and containing the corresponding components of the costs of Russian commodity producers. Deripaska O.V. What should natural monopolies be like? / “Russian Economy: XXI Century”. - 2011. - No. 11.

The task of the state is to balance the interests of all participants in the process, while ensuring the preservation of stability in the economy and sustainable growth. Reforms of natural monopolies should become an integral part of the overall strategy for the country's socio-economic development. In the meantime, the opposite situation is emerging: the main initiators of reforms and their ideological fillers are the monopolies themselves, the struggle of stakeholders around the concepts of restructuring and the content of laws is intensifying, and no one has assessed the consequences of the reforms for the economy. It is necessary to carry out comprehensive analysis, which will answer, among other things, the questions of how the price dynamics of natural monopolies will affect the regional specifics of production, the financial situation of consumer enterprises and the investment processes taking place in them. Neglecting these issues will ultimately lead to slower economic growth.

Reform should be built taking into account the special conditions of the functioning of natural monopolies in Russia, which are not repeated in any country in the world. These conditions are associated with the large extent of the territory, which determines, on the one hand, the role of natural monopolies as an economic mechanism of state integration, and on the other, inevitably high transport costs; harsh climatic conditions in most of the territory, which inevitably leads to higher energy intensity of the economy.

Also, the strategic importance of the products of natural monopolies for national security, geopolitical influence and ensuring the export potential of the country and the historical location of enterprises (including large ones), economically determined distribution of industrial production with a focus on energy sources.

Therefore, the approach to reforms must be strictly balanced, based on accurate calculations. Any direct transfer foreign model on Russian soil is simply unacceptable. Moreover, the technological features of each of the branches of natural monopolies require a special approach. It is obvious that natural-monopoly and potentially competitive activities in each of them should be divided to the extent that is practical under existing conditions.

State policy in the area under consideration will be aimed at solving the following tasks: restructuring of these industries to clearly distinguish between natural monopolistic and potentially competitive types and potentially competitive types economic activities, strengthening government control in the first case and stimulating competition in the second, increasing transparency of the cost structure; full organizational and financial transparency of the activities of enterprises in these industries; equalization of tax conditions for producers and consumers different types fuel, as well as various transport services.

Also ensuring non-discriminatory access of independent producers and consumers to the services of natural monopolies with effective antimonopoly regulation and ending cross-subsidization of various categories of consumers.

Conclusion

The problem of regulating natural monopolies has always had a special place. Maintaining a balance between the interests of the population and monopolists is a rather difficult task. In order to achieve the desired result, it is necessary to determine tariffs in the most effective and objective way, taking into account the interests of both parties. And it will also be necessary to stimulate natural monopoly firms to reduce production costs and improve service quality. To implement all these tasks, regulatory bodies for natural monopolies have been created. Before making any decision on regulatory changes, regulators conduct a thorough analysis of the economic sector, taking into account all required aspects of their activities.

In terms of their economic, technical and organizational characteristics, the Russian natural monopolies RAO UES of Russia and OAO Gazprom are at the level of the best world standards, and in certain indicators they surpass them. These economic structures, if treated wisely, can not only pull our economy out of today’s breakthrough, but also allow it to take over in the 21st century. one of the leading places in the world. Natural monopolies should be considered as our national monopoly, which in many ways has no analogues in the world.

For the development of the economy, regulation of the activities of natural monopolies is necessary, but direct regulation, not division. Natural monopolies have every chance not only to fit organically into the economy of the region, but also to raise its level to extraordinary heights.

The government's priority should be to regulate existing natural monopolies. Taking into account the special role for the life of society of economic sectors related to natural monopolies, their state regulation (especially in conditions of systemic economic crisis) must be focused, for starters, on stopping or curbing the rise in prices for products (services) of a natural monopoly on the domestic market while maintaining these tariffs (tariffs) at a level sufficient for expanded reproduction. With the right policy of the country, one can count on the subsequent prosperity of both monopolistic entities and the country's residents.

List of used literature

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5. Gryaznova A.G., N.N. Dumnoy Economic theory. Express course: textbook. manual - M.: Knorus, 2010.

6. Deripaska O.V. What should natural monopolies be like? / "Russian Economy: XXI Century". - 2011. - No. 11.

7. Esipova V.E. Prices and pricing: textbook. - St. Petersburg: Peter, 2009

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