Connection of competition with the institution of private property. The existence of the institution of private property leads to the emergence of a monopoly based on the possession of a rare resource.

1. In your opinion, what is the significance of such a feature of the free market as the mobility of resources? How is the most important feature of this market – the free market price – related to the other features?

Free maneuvering of resources , their presence, which ensures mobility in the use of production factors for its development; the ability to change the conditions of production, its technology, the free movement of any capital in any area of application; underutilization is a prerequisite for a healthy market economy to function.

In a free market, the relationship between price and its types of owners of goods and money develops naturally and is not regulated by anyone. The market price is the actual price, which is determined according to the demand and supply of goods. Depending on the different conditions for the sale of goods and services, different types of prices are set.

The connection with the first sign of a free market is an unlimited number of participants (presence of competition). The competition strongly depends on the number of producers-sellers and buyers. It is deployed among sellers who want to sell their product at a higher price. Competition is actively developing among buyers who seek to purchase goods at a lower price. In the rivalry between them, those who offer a higher price than the market price win. As a result of this rivalry, a common price is established for homogeneous goods and a specific type of supply and demand curve.

Availability of complete information about the state of the market of all business executives. The price of a particular product or service depends on many factors.

The mobility of resources makes it necessary to respond flexibly and quickly adapt to changing production conditions, contributes to a more efficient use of resources in the production of goods necessary for society. This has an impact on competition, which further affects prices.

The impossibility of influencing market participants. The seller will not sell the goods at a loss, the buyer will not purchase the goods at a higher price with a choice.

2. Explain how the market system serves as a vehicle for the exchange of information about decisions and the implementation of decisions regarding the allocation of the economy's resources.

Enterprises have the right to acquire economic resources, organize the process of production from these resources of a good or service of their own choice, and sell this good or service in the markets of the choice of the firm itself. No artificial obstacles or restrictions imposed by the government or other manufacturers prevent entrepreneurs from making the decision to enter or leave any particular industry. The limits of freedom to choose suppliers of human and material resources are determined by consumer choice. Ultimately, the consumer decides what the economy should produce, and within the limits thus established, resource providers can make their free choice. Thus, in reality, resource providers and businesses are not at all "free" to produce goods and services that consumers do not want. In addition, there are fairly broad legal restrictions on the exercise of all these forms of free choice.

3. What is meant by the shortcomings (imperfection) of the market? How are market imperfections related to ethical issues? Give examples of how market failures complicate the decision-making process of management firms and civil servants.

As a self-regulating system, the market is not an ideal system. In general terms, the “weaknesses” of the market are manifested in the fact that the benefits for individuals often do not coincide with the public good, and also in the fact that the costs of some activities that society needs are so large that private entrepreneurs are not able to bear them. The market is not able to solve a number of social problems: the maintenance of pensioners, the sick and orphans. Moral ideals, kindness, justice, patriotism are alien to the market. The market ceases to be effective in regulating the production of public goods, such as public transport, defense, the public education system, a number of elements of the urban economy; it also does not provide fundamental research in science. In addition, market competition, leading to the defeat of the weaker ones, can generate social tension due to the stratification of society into rich and poor.

An example is road signs that regulate the rules of the road, they must be used by everyone in order to avoid undesirable consequences. These goods are public goods that are free to the consumer but not free to the public. The peculiarity of public goods is that everyone can use them, but is not obliged to pay for them. In addition, it is usually impossible to limit their use.

Market relations create favorable conditions for the manifestation of selfish interests that give rise to speculation, corruption, racketeering, drug trafficking, and other antisocial phenomena. In such cases, the state introduces strict standards, restrictions, uses a system of fines, determines the boundaries that economic activity participants are not entitled to cross.

4. The main agents of the market are firms and the population. How are theyare interconnected in the system of market relations, and what are their mainfunctions? Explain your answer graphically.

The essence of market relations is reduced to reimbursement of costs of sellers (commodity producers and merchants) and their profit, as well as satisfaction of the effective demand of buyers on the basis of free, mutual agreement, compensation, equivalence and competitiveness. This is what constitutes the generic, essential features of the market. The material basis of market relations is the movement of goods and money.

Topic 4. Ownership and entrepreneurship in a market economy.

1. According to the theory of property rights, not the means of production or labor power are property, but a bundle or share of rights for their use (R. Coase's theory). What is the difficulty in using the ideas of R. Coase in the economic life of Russia?

Answer: The theory of property rights proceeds from the basic idea that any act of exchange is essentially an exchange of bundles of rights: when a transaction is made in the market, two bundles of property rights are exchanged. A bundle of rights is usually attached to a particular physical good or service, but it is the value of the rights that determines the value of the goods exchanged.

Private appropriation has two types, which differ significantly from each other: ownership of the means of production by a person who himself works, and ownership of the means of production by a person who uses someone else's labor.

The first type of private property is owned by peasants, artisans and other people who live by their labor. In this case, the worker gets all the fruits of his management and the complete freedom of the worker from any form of oppression and enslavement is ensured. When the owner and the worker are combined in one person, there arises a deep material interest in working for personal benefit.

The second type of private property is owned by persons who create relatively large farms using the labor of many workers. If in the first type of private appropriation the material and personal factors of production are naturally combined insofar as they belong to one person, then in the second type of economy the situation is completely different. In it, the means of production and the fruits of labor are alienated from workers, the second type private property It manifests itself in specific forms - slave-owning, feudal and individual capitalist, private.

Since in the second type of privately owned farms there is an alienation of workers from the means of production, two kinds of socio-economic methods of combining factors of production are used here: a) non-economic (violent) coercion and b) economic attraction of workers to work.

Employees, being legally free, can choose the place and type of work at their own discretion. They get paid for their work wages and to a certain extent are interested in the results of production. Therefore, as a rule, methods of non-economic coercion are not applied to them. At the same time, having no means of production and other sources of subsistence, they are forced to sell the only thing they have - their working hands, their ability to work, therefore, they are completely dependent on employers, which means economic coercion to work.

The difficulty in using this idea may be either because they are not clearly defined and poorly protected by Russian legislation, or because they are subject to various kinds of restrictions (mainly by the state).

2. Is the institution of private property indispensablean attribute of a market economy?

For the emergence of market relations, an important role is played by the presence or absence of private ownership of economic resources and, above all, the resources of land and tools for separate management. In most countries, the evolution of communal economic relations and the emergence of classical market system connected precisely with the traditions of private ownership of land as a resource of management. In various epochs of human history, small-scale farms created the greatest economic impetus for the formation of a market system with its classical features and mechanisms of competition, equilibrium and free pricing. The destruction of the traditions of private ownership of land destroyed the market system itself. An example of this is the interrupted evolution of a developed market economy beginning of the twentieth century and replacing it in some countries with a command-administrative system. Since the market mechanisms of exchange were destroyed, the distribution of produced goods for individual consumption was carried out through state trade at centrally established prices. This practice has shown that it is impossible to provide for everyone with natural limited resources. In countries with private ownership of economic resources and a developed market system, the principles of exchanging labor products and guaranteeing the well-being of peoples turned out to be more just and realistic.

3. Explain the following statement: “The consumer, and onlythe consumer, using his voting power, determines how large there must be a firm. What are the main legal forms of business organization? What are the advantages and disadvantages of each of them?

Businesses are created with the aim of making a profit, which they can only get from the consumer. The more services or goods can be sold to the consumer, the more the company will receive profit. The volume of output can be increased either by expanding the firm itself or by merging with another firm.

The main legal forms of business organization:

Private farms - individual entrepreneur

Partnerships (partnerships)

Joint stock companies

Private enterprise:

Advantage:

Automatic activity control

Flaws

The entrepreneur is personally responsible for his activities

Low liquidity of investments: investments are his own property

The concept of institutional matrices interprets institutions, let's call them basic institutions, How deep, historically stable foundations of social practice, ensuring the reproduction of the social structure in different types of societies. Basic institutions are historical invariants that allow society to survive, develop and maintain self-sufficiency and integrity in the course of historical evolution, regardless of the will and desire of specific social actors.

What determines their quality? What determines the stability of the system of basic institutions in the X and Y-matrices, what is the basis for the constancy of these forms?

The reason for the existence of two types of institutional matrices lies in the peculiarities of the material and technological environment of certain countries. To explain this phenomenon in the theory of institutional matrices, the thesis about the decisive role of the material and technological environment in the area of emergence and development of a state is postulated.

Under material and technological environment are understood as “significant for the organization of production natural conditions, public infrastructure and sectors that are priority for ensuring the life of the population. As alternative concepts, "characterizing the multidirectional influence of the material and technological environment on the nature of institutions, communality and non-communality" are singled out.

« communal(or non-communality) of the material environment is not so much inherent in it as a social property, i.e. manifested in the course of interaction of society with this environment. By themselves, natural conditions or technological methods do not carry the alternative named social properties, they manifest, express or acquire them in the process of being involved in economic circulation and social life.

Communality means such a property of the material and technological environment, which involves its use as a single indivisible system, parts of which cannot be separated without the threat of its collapse.. The communal nature of the material and technological environment implies the inseparability of links between elements, its presentation as a single whole, which is under common control.

In its turn, non-communality means technological disunity, the possibility of isolation of the most important elements of the material infrastructure and the associated possibility of their independent functioning and private use.

The institutional matrix X refers to redistributive (redistributive) economy.

Redistribution (K.Polanyi's term) means movement material assets and services within the framework of a common, single property, which objectively requires the coordination of economic transactions. Institutes of the economic sphere of institutional matrices

Basic institutions of market economies (Y-matrix):

Institute private property"determines that persons or organizations that own their property have full rights and responsibilities for its use and disposal."
Institute competition- the rivalry of private owners with each other in obtaining the necessary production resources and selling the results of their activities. "It is the institution of perfect competition, as Adam Smith and other economists have shown, that leads, in the limit, to the efficient allocation and use of scarce resources in market economies."
Institute exchange (purchase and sale) produced products and services that have the nature of goods, which ensures the reproduction of market economies. The institution of exchange, or sale and purchase, regulates the relationship between private owners, producers and consumers in such a way as to ensure their simple and extended reproduction.
Institute hiring labor. “Thus, labor relations also have the nature of an exchange, or sale and purchase, as K. Marx wrote, of labor power. Wage labor is a universal institution that regulates the involvement of social forces in labor and ensures their reproduction under conditions of private property.
Institute arrived. Profit acts as a "socially recognized criterion of efficiency, a regulator through which the activities of isolated private farms are correlated throughout society.<…>The implementation of the reproduction of capital, or profit, is for the participants in the production of the main motive for action, a feedback signal, evidence that their activities are recognized, appreciated by society, and opportunities have been created to continue business cycle. Thus, the institution of profit, together with the institution of competition, ensures the self-regulation of market economies and makes it possible to judge the level of efficiency of the economic system.

Basic institutions of redistributive economies (X-matrix):

Institute common property . “It determines the specifics of all other institutions of the redistributive economic system. The institution of common property means that the owner of the main resources and means of production is recognized - explicitly or latently - by society as a whole. This implies the possibility of using the goods produced and consumed by all members of society according to the rules established each time and does not imply boundaries between them in terms of property rights, as is typical under the dominance of the institution of private property. Even if common property is distributed among economic entities using it and assigned to them to perform certain tasks - and it cannot be otherwise in conditions of ever-increasing complexity of production - their actions are constantly correlated with the interests of society as a whole and among themselves in the course of inevitable, objectively required agreements."
Institute redistribution (accumulation - approval - redistribution). What is the difference between redistribution and exchange? Exchanges are horizontal flows of products and services, which in market economies have the nature of goods, between separate economic entities, private owners. The exchange implies a profit derived by the participants in the transactions. Redistribution means the movement of material values and services within the framework of a common, single property, which objectively requires the coordination of economic transactions. The law of economy of transaction costs leads to the fact that coordination is concentrated in one body, which begins to perform the functions of the Center. … Redistribution as a basic institution is indivisible into one or another phase, it is a single continuous process of relations of the “accumulation-coordination-distribution” type. In the process of redistribution, economic entities are endowed with parts of common property and the rules for its use are established, that is, the parameters for the distribution and accumulation of the necessary resources and produced values are set. Like any other institution, redistribution provides for sanctions for inefficient performance of the function it is aimed at. If the property received by an economic entity is used insufficiently efficiently, for other purposes, or if damage to public interests occurs during its use, there are mechanisms for the seizure, return of property to general disposal and then transfer to other, more efficient economic entities.
Institute coordination. Coordination is opposed to competition in market economies, and means correlating the actions of participants economic activity under the same ownership relative to each other. “The institution of coordination regulates the efficient use of scarce resources and produced goods and services in the public interest, determines the direction of material flows within the framework of common property, ensures intersectoral proportions, etc. The operation of the institution of coordination ensures the continuity of the functioning of the economic sphere of society, since through it the participants in economic activity receive both the necessary production resources and the conditions for their own reproduction.
Institute office work, that is, the nature of recruitment to work through redistribution. “In redistributive economies, the possibility of using the benefits produced on objects of common property is determined by the labor contribution of the economically active population to its functioning and development. This means that in redistributive economies there is an institution of service labor. Service labor presupposes a historically changing, but retaining its content, order of labor accumulation on the scale of the social economy and its distribution based on the processes of coordinating the need for the use of labor power and the need for its reproduction.
Institute proportionality. “In the market, the survival of the economy as such and the subjects operating in it is impossible without the institution of profit, which ensures their reproduction as market participants, personal consumption and production of a product for use by other members of society. Under the conditions of common ownership, the economy can exist only as a proportional economy, when what is produced in one part of it is consumed in another segment. Excessive storage of produced values, as well as their underproduction, threaten to disrupt the entire production cycle in a communal material and technological environment. Therefore, redistribution inevitably implies the operation of the institution of proportionality. The theory of socialist reproduction constantly pointed to the requirement of proportionality of production carried out under the domination of public property. It is known that within its framework the “law of planned proportional development” was postulated.

· Described the institutional complex of five basic institutions that make up the core of market economies - private property, competition, exchange, wage labor and profit.

A comparison of these economic institutions of the two matrices is shown in the Table.

Functions and Content of Economic Institutions in X- and Y-Economy Models

Functions of economic institutions	The Basic Institutions of the X-Economy	Basic institutions of the Y-economy
Goods movement	Redistribution (accumulation - coordination - distribution)	Exchange (purchase and sale)
Consolidation of benefits	Supreme conditional property	Private property
Interaction of economic agents	Cooperation	Competition
Labour Organization	Service work	hired labor
Feedback (efficiency) signals	Cost containment (X-efficiency)	Increasing profit (Y-efficiency)

Classic types of monopoly

World economic theory At least six main types of monopoly are known and practiced:

1.	Market monopoly that grows out of market competition and is based on a huge scale of concentration and centralization of production and capital (manufacturing, raw material and financial monopoly).
2.	Technological monopoly - represented by a technological oligopoly (metallurgy, electric power industry, railway transport, etc.). This refers to several large corporations that control the production and marketing of a certain type of product.
3.	Monopoly due to product differentiation. Product differentiation is one of the main features of monopolistic competition.
4.	Legal monopoly, which is embodied by enterprises that are leaders in certain areas of modern scientific and technological revolution. It disappears as the results are disseminated and commercialized scientific research and technological developments by other entities.
5.	State monopoly (absolute monopoly) associated with the production on a national scale of such public goods as national defense, public administration, a unified energy system, fundamental sciences, etc.
6.	Monopsony - when there is only one buyer of a product, service or resource in the market. As a rule, the monopsonist is the state, acting as the sole buyer.

To move to a modern market economy, one has to overcome great difficulties. They are connected, first of all, with the fact that between the start - an absolute market monopoly - and the finish - a developed market, as they say, there is a huge distance. This can be clearly seen from the table, which compares the most important features of the starting and finishing positions with each other.

Using the text and social science knowledge, explain the connection between competition:

a) with the institution of private property;

b) with the institution of human rights and freedoms;

c) with the efficiency of law enforcement agencies and the judiciary.

Read the text and complete tasks 21-24.

The peculiarity of competition lies in the fact that in specific situations where it is significant, its action cannot be verified, but can only be evidenced by the fact that the market will win when compared with any alternative social mechanisms.

Which boons are rare, or which items are boons? And what is their rarity or value? That is what competition is meant to be. The preliminary results of the market process at each individual stage indicate to individuals the direction of their search. To use the knowledge widely dispersed in a society with a developed division of labor, it is not enough to rely on people who know perfectly well for what specific purposes well-known objects from their familiar environment can be used. What kind of information about the various goods and services offered by the market may be of interest, suggest prices to individuals. This means that the market makes use of personal knowledge and skills, which always form individual combinations that are unique in one way or another and are based not only and not even so much on the assimilation of such facts that could be listed and reported at the request of some authority.

In the literal sense of the word, "economy" is an organization or social structure where someone consciously places resources in accordance with a single scale of goals. There is none of this in the spontaneous order created by the market: it functions in a fundamentally different way than the "economy" proper. It differs, in particular, in that it does not guarantee the obligatory satisfaction of first more important, according to the general opinion, needs, and then less important ones. This is the main reason why people object to the market. Indeed, all socialism is nothing more than a demand to turn the market order into an "economy" in the narrow sense, in which a common scale of priorities would determine which different needs are eligible and which are not.

There are two kinds of difficulties associated with this socialist plan. As in any conscious organization, the project of the “economy” itself can reflect only the knowledge of the organizer himself, and all participants in such an “economy”, understood as a conscious organization, must be guided in their actions by a single hierarchy of goals to which it is subordinate. Accordingly, the spontaneous market order has two advantages. It uses the knowledge of all its members. The ends it serves are the private ends of individuals in all their diversity and contradiction.

Of decisive importance for understanding the functioning of the market order is the fact that a high degree of coincidence of expectations with reality directly depends on the systematic divergence from it in a certain part of them. But the mutual adjustment of plans is not the only achievement of the market. It also guarantees that any product will be made by people who can do it at less or at least not more cost than someone who does not produce this product.

If, even in highly developed economic systems, competition is important as an exploratory process, during which pioneers search for untapped opportunities that are available to all other people if they succeed, then this is even more true in relation to undeveloped societies.

(F. A. von Hayek)

What, according to the author, is the attractiveness of the "economy", and what are the difficulties of its functioning? Using the text, indicate two manifestations of attraction and two difficulties. Based on social science knowledge, explain the meaning of the concept of "economic competition".

Explanation.

The correct answer must contain the following elements:

1) manifestations of attractiveness:

No spontaneity;

Guarantees obligatory satisfaction first of the more important, in the general opinion, needs, and then - less important;

OR the overall priority scale determines which of the various needs are to be met and which are not;

2) difficulties:

Reflects only the position and interests of the "organizer" (the state, planning bodies, etc.);

OR there is no mutual adaptation of the plans of participants in economic activity;

Inefficiency (also does not guarantee that any product will be made by people who can do it at a lower or at least not more cost than someone who does not produce this product).

3) The meaning of the concept is explained, for example:

Economic competition is the rivalry of subjects of market relations for the best conditions and results of commercial activity.

Elements of the answer can be given in other formulations that are close in meaning.

Explanation.

The correct answer should contain functions and corresponding examples:

1) determining the value of economic benefits (for example, representatives of working professions are most in demand on the labor market, and it is difficult for specialists with legal and economic education to find a job);

2) search for untapped opportunities (for example, an entrepreneur analyzed the fast food market in the city of M., found that most enterprises offer American, Chinese and Italian cuisine, and opened a chain of eateries with Russian cuisine).

Other examples can be given

Explanation.

The correct answer should include an explanation for each item, for example:

a) market participants compete for ownership of the most valuable economic goods; risk their property in an effort to make a profit;

b) competition is impossible without freedom of acceptance economic decisions, disposal of their property and ability to work, the right to receive the necessary information;

c) freedom of competition needs legal protection, in addition, competition often gives rise to disputes between business entities, the resolution of which requires the effective work of law enforcement and judicial authorities.

Other explanations can be given

The market economy, as a specially ordered system of relations between producers and consumers, is based on the interconnection and interdependence of a number of institutions and principles:

1) private property;

2) economic freedom;

3) personal interest;

4) competition;

5) reliance on the system of market prices;

6) the limited role of the government.

Private property is the original, basic condition organization of the market system of the economy. It manifests itself in the fact that material resources are owned by private individuals. Along with the freedom to enter into binding legal contracts with partners, it allows individuals and their associations to acquire and sell, control and use material resources at their discretion. Owners, motivated by the right of private property, are interested in the maximum efficient use material resources. In order to make a profit, they strive to produce what and in what quantity buyers want to receive and can pay for. The institution of private property, supplemented by the right of will and inheritance, allows this interest to be maintained for centuries.

However, legal restrictions on private property rights are inevitable, associated with the prohibition of the harmful use of material resources that can cause damage to the external environment and society.

Economic freedom has a close relationship with private property. It manifests itself, firstly, in the right of each economic entity to independently make choices and implement decisions, and, secondly, in responsibility for negative or negative results.

Economic freedom is represented by two types: freedom of enterprise and freedom of choice. Freedom of enterprise means the absence of artificial restrictions that could prevent entrepreneurs from entering or leaving any industry. “Entering an industry” means organizing the production of a particular product. “Exiting an industry” means ceasing the production of the corresponding product. Free enterprise includes the right to acquire economic resources, organization of their use and sale of produced goods and services in independently selected markets.

Freedom of choice for households that own the labor force and Money- means use them at your own discretion. Workers have the right to do any kind of work that they are capable of. As consumers, they are free, within the limits of their monetary income, to buy goods in the set and quantity most suitable to satisfy their needs.

The freedom of consumer choice turns out to be the broadest of the freedoms, since the limits of entrepreneurial freedom are determined by consumer choice. It is the consumers who determine what and in what quantity should be produced, and within the limits thus established, resource suppliers and producers can make their free choice. They are not "free" to produce goods that consumers do not want.

Self-interest acts as the main driving force in the market economic system. It manifests itself in the fact that each economic unit strives to do what is more profitable for itself.

Therefore, manufacturers aim to maximize the profit of the enterprise or minimize losses, and the owners of material resources, when selling or leasing them, seek to obtain the highest income; for a given amount of burden and complexity of labor, workers strive to receive the highest wages; consumers try to buy a certain product at the lowest price. Thus, personal interest forms a unified behavior and mode of action of economic (economic) entities in the implementation of their free choice, which gives direction and order to the functioning of a market economy.

Freedom of choice and freedom of enterprise, complemented by self-interest, serve as the basis for competition. Competition, understood as economic rivalry, is a fundamental property of a market economic system, the basis of its effective functioning. Competition among producers drives each of them to produce the goods that customers want in the most efficient way and get them where they are needed. Sellers compete for the right to receive buyers' money, since the latter's income is limited.

Competition between producers and/or sellers is possible under two conditions: 1) the presence on the market of a large number of independently acting buyers and sellers; 2) freedom of decision-making by buyers and sellers about entering and exiting the market.

In accordance with the first condition, there is a dispersal of economic power, which manifests itself in the ability of economic entities to influence the price of goods. At the same time, competition puts limits on the realization of personal interests and thus represents the main regulatory force of the market economy.

The second condition of competition ensures the flexibility of the market economic system, encourages producers to adapt to changing consumer tastes, technology, and the supply of resources.

Consumer competition arises where and when there is a shortage of goods. In consumer competition, the buyer who offers the highest price for the desired good wins.

The system of market pricing acts, first of all, as the main factor in the distribution of goods and resources. Price is the monetary value of a good. It carries a large amount of information and has a strong influence on the economic behavior of buyers, sellers, and producers. Prices for goods and resources serve as guidelines, guided by which the owners of resources, producers and buyers of goods make their free choice, adjust it in accordance with personal interests. Through the system of market prices and markets, society makes its decision about what to produce, how production should be organized, how to distribute the results of production between economic entities. Thus, the system of markets and prices plays the role of an organizing force.

It is believed that a competitive market economic system promotes high degree efficient use of their resources. For this reason, it is assumed that there is no real need for government intervention in the functioning of such a system. The role of the state is reduced to the establishment of the most general legal restrictions for the implementation of individual choice.

6.3. Institutes of contract law and entrepreneurship in the transition economy

The Civil Code of Ukraine establishes the principles of contractual relations, the rules and procedure for concluding a contract, the content of the contract, the rights and obligations of the parties, and ways to protect the violated rights of the parties to the contract.

Treaty is an agreement between two or more parties aimed at establishing, changing or terminating civil rights and obligations. Treaties are divided into unilateral, bilateral and multilateral. If one party assumes the obligation to perform certain actions in relation to the other, which has only the right to demand without fulfilling a counter obligation, the contract is called unilateral. A bilateral contract takes place when both parties are endowed with both rights and obligations.

The criterion for classifying contracts is whether they are paid or not. The presumption of payment is established, unless otherwise provided by law, by the contract itself, or does not follow from its essence. Some contracts are always reimbursable (paid), for example, purchase and sale, contract, delivery, and the other part is always gratuitous (donation, inheritance). Some contracts, depending on the conditions, can be both paid and gratuitous (services for maintenance, cleaning, which can be performed by both employees and family members).

Principles contractual obligations are the freedom of the contract, the economy of cooperation, the proper performance of obligations, the obligation to fulfill the contract, the judicial application of contractual and legal sanctions against the violator of obligations. The general civil principles of contractual obligations include justice, good faith, reasonableness, non-abuse of the right, morality.

The formation of the institution of contract law is especially necessary for small and medium-sized businesses.

Connection of competition with the institution of private property. The existence of the institution of private property leads to the emergence of a monopoly based on the possession of a rare resource.

More on the topic Fundamentals of a market economic system:

6.3. Institutes of contract law and entrepreneurship in the transition economy