Monopoly is generally divided into seller's monopoly and buyer's monopoly. There are many factors that lead to the formation of monopoly. The following is the answer to the reasons why monopoly is formed. I hope it will be helpful to you!
Monopoly Reasons for formation
It is generally believed that the basic reason for monopoly is entry barriers. That is to say, a monopoly manufacturer can maintain its position as the only seller in its market because other companies cannot enter the market and compete with it. .
Monopoly refers to a combination carried out by a small number of large capitalists in order to jointly control the production, sales and operating activities of one or several departments in order to obtain high monopoly profits. It is the deepest economic foundation of imperialism and the economic essence of imperialism.
Monopolies grew out of free competition under government protectionism. In the stage of capitalist development with free competition as its basic feature, in order to capture more surplus value, capitalist enterprises will inevitably adopt advanced production technology and scientific management methods, implement production specialization and collaboration, and improve labor productivity; In the fierce competition, large enterprises often rely on their economic advantages to continuously crowd out and annex small and medium-sized enterprises, so that the production of production materials, labor force and labor products are increasingly concentrated in their own hands. At the same time, the development of the capitalist credit system and joint-stock companies broke through the limitations of individual capital and accelerated the development of capital concentration, thereby also promoting the development of production concentration. When the concentration of production and capital develops to a certain extent, it means that the number of enterprises is reduced. Most of the production in a department is concentrated in the hands of a few or dozens of large enterprises, and it is easier for them to reach agreements and operate together. Departmental production and sales, thus making it possible to create a monopoly; due to the existence of a few large enterprises, small and medium-sized enterprises are in a dominant position. In order to avoid losing both sides in the competition and ensure that each other is profitable, a few large enterprises will also Seek temporary compromise and reach a certain agreement, thereby making the creation of a monopoly necessary. Free competition leads to production concentration, and when production concentration develops to a certain extent, it will inevitably lead to monopoly. This is a general and basic law for the development of free competition capitalism into the stage of monopoly capitalism. At the end of the 19th century and the beginning of the 20th century AD, monopoly had become the basis of all capitalist economic life.
In the development process of capitalist economy, free competition leads to production concentration, and the development of production concentration to a certain stage will inevitably lead to monopoly. When monopoly replaces free competition and takes the dominant position in economic life, capitalism develops to the stage of imperialism, that is, monopoly capitalism.
There are three main reasons for the formation of monopoly:
Natural monopoly: The cost of production makes one producer more efficient than a large number of producers. This is the most common form of monopoly.
Resource monopoly: key resources are owned by one company (such as the dubbing industry of wireless television).
Administrative monopoly: The government gives a company the exclusive right to produce a certain product or service.
There is also a monopoly by the government, which is called a monopoly. Types of Monopoly
Franchise Monopoly
Some exclusive business privileges are stipulated and protected by law. Patents and copyrights are monopolies licensed by law. In order to encourage creation and invention, most countries have enacted patent laws. It can be seen that patent monopoly is caused by legal barriers. In some cases, the government grants a manufacturer exclusive rights to operate; other times, the government grants exclusive operating privileges through contracts through bidding competitions.
Natural monopoly
If a certain product requires a large investment in fixed equipment and large-scale production can greatly reduce costs, then a large manufacturer may become the only producer in the industry. When one large manufacturer supplies all market demand, the average cost is the lowest. If two or more manufacturers operate in the market, it will be difficult to make profits. In this case, the manufacturer forms a natural monopoly.
Strategic monopoly
If no one except the monopolist masters a certain production technology or know-how, the market will naturally form a technical monopoly. When there are neither technical barriers nor legal barriers, manufacturers establish or consolidate their monopoly position by building high barriers. This is a strategic monopoly.
Other monopoly barriers
The above barriers are not exhaustive, nor are they necessarily mutually exclusive. For example, a manufacturer controls the supply of a certain raw material. All barriers that prevent competitors from entering the market are causes of monopoly. The Harm of Monopoly
Monopoly and competition are inherently contradictory. Due to the lack of competitive pressure and development motivation, as well as the lack of a strong external control and supervision mechanism, the service quality of monopolistic industries is often unsatisfactory and often fails. Violates market rules and infringes on consumers’ rights to fair trade and choice. This is a rule, and it is the same in China and foreign countries.
Price monopoly raises the cost of the entire society. Monopoly industries are generally engaged in public services that are closely related to most people and industries, such as telecommunications, postal services, tap water, electricity, gas, and railways. , aviation, etc. Because these industries penetrate into all aspects of society, the price of services in these industries is related to the cost of the entire society. The overall efficiency of these industries is directly related to the ability of other industries to participate in international competition.
In the era of planned economy, departments such as telecommunications and railways used to belong to state administrative departments. However, when these departments entered the market, they still had a monopoly position. Once they began to pursue profits in the market, they would adopt monopoly pricing Transferring a large number of consumer benefits to the hands, allowing privileged departments and privileged companies to obtain profits that are far higher than competitive market prices. The result is increased competition costs for society as a whole.
Industry monopoly leads to insufficient effective investment
According to industry insiders, there are currently dozens of approved private express companies in Beijing, Shanghai and Shenzhen, but underground? black market? express companies The number is more than 1,000. Although in accordance with the provisions of the country's Postal Law, the delivery business of letters and other items of a letter nature is exclusively operated by state-owned postal enterprises, many express delivery companies are also participating in this service in various forms. According to statistics, the current lowest EMS rate is 23.3 yuan, while the lowest rate for private courier companies is only about 10 yuan. Excess profits will inevitably attract funds, even if the company's identity is not legal. According to statistics, since 1995, the annual growth rate of EMS turnover has been 2%, but its market share has been declining at a rate of 4% per year. During the same period, the turnover growth of the four major international express delivery giants in China remained above 20%. Although EMS is still the "big brother" in the domestic express delivery market, its market share has dropped from nearly 97% at its peak to about 40% currently.
This phenomenon is common in monopoly industries. On the one hand, monopoly companies can obtain excess profits through monopoly, which hinders the improvement of efficiency and hinders their enthusiasm to expand business scale. In addition, through industry monopoly, social funds are prevented from entering the industry. Although there are always funds to induce profits and enter through various ways and violations, the scale is always limited.
Insufficient investment, declining employment, and relatively weak consumption are the main problems in the current economic operation of our country. Some experts pointed out that there are many reasons for China's current lack of investment, but one of them is that many high-profit industries are monopolistic industries that are prohibited from entering the market. In these industries, monopoly leads to inefficiency, resulting in this part of profits not being reflected. The real profit situation has become a huge waste. At the same time, it has also greatly dampened the enthusiasm of capital for investment. This has resulted in the so-called "capital strike" and intensified the downturn in the investment market.
Administrative monopoly breeds the cancer of corruption
Among the large number of monopolistic behaviors that appear in the current domestic market, administrative monopoly undoubtedly occupies the top position. The restriction of competition implemented by the government and its departments by abusing administrative power is called "administrative monopoly".
Due to the intervention of administrative power, administrative monopoly is more harmful to fair market competition than natural monopoly and industry monopoly. In particular, a small number of corrupt elements use the power to manage public affairs. They can only do things if they are given money. , Monopoly has become a hotbed of corruption, which not only affects economic development, but more importantly, damages the government's credibility and breaks trust with operators.
Research results from domestic research institutions show that one of the important current manifestations of corruption is the loss of a large amount of rent (rent in the economic sense here) caused by monopoly. For example, according to their estimates, the electric power industry, one of China's largest monopoly industries, causes annual rental losses between 56 billion yuan and 112 billion yuan, while the civil aviation monopoly rents are as high as 7.5 billion yuan to 100 billion yuan per year. billion. Monopoly transfers consumer income to monopoly producers, creating excess profits and causing social welfare losses. Such losses are estimated to range from 130 billion yuan to 202 billion yuan per year. Measures to deal with monopoly
Establish basic anti-monopoly principles
(1) Maintain the principle of fair competition. The state should formulate corresponding industrial development policies in all production and service fields except military and national security and other strategic fields that are of great concern to the national economy and people's livelihood, and fully introduce a fair competition mechanism so that administrative monopolies can be eliminated in competition and the overall management of society , technology, quality and efficiency will be comprehensively improved based on fair competition, and the healthy, sustainable and rapid development of the socialist market economy will also receive good institutional support.
(2) Pay attention to pertinence and progressiveness. Formulate laws and regulations that restrict and facilitate supervision of various business activities such as industry and department business systems and decision-making, procurement, services, pricing, and internal distribution; solve non-risk and non-paying enterprises caused by monopoly privileges through taxation income and personal income; establish a highly authoritative and independent anti-monopoly law enforcement agency, which will be responsible for establishing cases, investigations and handling of illegal monopoly behaviors based on the phenomena reflected by authoritative social situation polling agencies and news media; giving priority to solving the problems faced by the majority of Hot and difficult issues related to monopoly reported by the masses and accepted social supervision. Among them, standardizing behavior is the focus, organization building is the key, step-by-step is the strategy, and fair supervision is the way.
Improving the institutional setup
On the one hand, the Administration for Industry and Commerce is the main enforcement agency for anti-monopoly in China. However, as the main body responsible for market supervision in China, the industrial and commercial administrative departments are also responsible for many tasks such as enterprise registration management, trademark advertising management, and consumer rights protection. Moreover, the industrial and commercial administrative departments are often difficult to enforce because their enforcement efforts are restricted by legal authorization. Effectively investigate and deal with administrative monopolies.
On the other hand, China’s current market regulatory agencies still have overlapping functions and multiple government agencies, which often lead to inconsistent law enforcement and repeated intervention. Therefore, relying on the Administration for Industry and Commerce to promote anti-monopoly The specific implementation undermines the fairness, authority and unity of China's antitrust law enforcement. To this end, it is recommended that China learn from the antitrust experience of developed countries with Western market economies and establish an antitrust enforcement agency with high authority, independence and fairness, with fair and honest legal experts and economists as core members.
We must give full play to the advantages of our country's socialist market economic system, implement strong macro-control, and implement forced intervention in the stubborn stone of monopoly, so as to truly and thoroughly cure China's economic "stubborn diseases" since the reform and opening up.
Improve the legal system
Improve the "Anti-Monopoly Law", encourage complete laws to encourage competition, and establish a fair market competition mechanism
Promote the "separation of government and enterprises", "Separate government and supervision", actively introduce competition mechanisms, boldly utilize private capital and foreign capital, and form an open market system.
Eliminate the remaining administrative monopoly of the traditional system