A complete monopoly market refers to a market structure in which there is only one supplier and many demanders.
The main reasons for the formation of monopoly markets are as follows:
1. The trend of production development
In the process of socialized development of production, free competition This will naturally lead to the concentration of production and capital, and when the concentration of production and capital develops to a certain stage, monopoly will inevitably occur. This problem can be analyzed from two aspects: on the one hand, when the concentration of production and capital reaches a certain stage, the possibility of monopoly arises. Because when production and capital develop to a certain stage, production and capital are gradually concentrated in the hands of a few large enterprises. It is easy for them to reach an agreement and form a monopoly, making it possible to manipulate and control market supply, while other enterprises are unable to cooperate with them. Competition; on the other hand, after the concentration of production and capital reaches a certain stage, production and capital will inevitably be concentrated in the hands of a few large enterprises. It is not easy for these large enterprises to defeat each other in the competition and win alone. In order to avoid losing both sides and obtain stable monopoly profits, they all have the same need to seek compromise to achieve a monopoly.
2. Requirements for economies of scale
The production of some industries requires the investment of a large amount of fixed assets and funds. If the role of these fixed assets and funds is fully utilized, this industry only needs one The production of enterprises can satisfy the product supply of the entire market, and such enterprises are suitable for large-scale production. Production at this scale is economical, production at less than this scale is uneconomical. From this point of view, economies of scale have become an important reason for the formation of monopoly. At the same time, the full use of a large number of fixed assets and funds gives the enterprise the ability and advantage to carry out large-scale production. Therefore, this enterprise can produce at a lower cost than other enterprises or lower than the cost of several enterprises producing at the same time. Cost, price, provide all supplies to the market. So, in this industry, only this company can survive, and other companies do not have this ability to survive.
3. The need to protect patents
Patents are certain rights granted by the government to inventors. These rights generally refer to the exclusive right to produce, utilize and process the patented object within a certain period of time, so that the inventor can obtain due benefits. After the inventor of a certain product, technology or service owns a patent, he or she has a monopoly on that product, technology or service during the validity period of the patent protection. A patent creates a property right that protects the inventor. During the effective protection period of the patent, no other manufacturer is allowed to produce and use such products, technologies and services, or to imitate these inventions. Without protection of invention patents, it will be difficult for society and production to progress and develop.
4. Natural restrictions on entry
When a producer owns and controls the supply source of one or several production factors necessary for production, it is formed. Natural monopoly. After this natural monopoly is formed, it will be difficult for any other producer to participate in the market supply of such factors, which will naturally limit or prevent the entry of other producers. In this way, the monopoly status of this producer and its monopoly interests are maintained. . The formation of this natural monopoly is due to two reasons. First, it is due to early entry in production. Because one enters an industry first, it has certain advantages in the production of a certain factor or certain factors, such as production technology or production and operation advantages, thereby increasing the difficulty for other producers to enter, and entering first can gradually form a monopoly. Second, it takes advantage of the natural geographical advantages in production. After the natural geographical advantage in the production of a certain factor or certain factors is occupied by a certain producer, other producers no longer have the natural geographical advantage when producing the same factor or the same factors, and the former forms a natural geographical advantage in production. Geographical advantage monopoly. For example, owning or controlling a key raw material can prevent competition and thus create a monopoly. The most common is to restrict competition through a monopoly on raw materials.
5. Legal restrictions on entry
The government gives certain companies the exclusive right to operate certain goods or services through franchising. This exclusive right to operate is an exclusive and exclusive right, which is granted and protected by the state through administrative and legal means. Government franchising protects exclusive businesses from competitive threats from potential new entrants, thereby forming a legal monopoly.
The government imposes legal restrictions on market entry to form a legal monopoly, mainly based on three considerations: First, based on the welfare needs of certain companies, for example, the production of certain drugs that must be strictly controlled must be exclusively operated by a government franchise; The second is based on considerations of ensuring national security, such as the production of various weapons and ammunition that must be monopolized; the third is based on considerations of national finance and tax revenue, such as the state's monopoly on certain lucrative commodities.
Response time: 2021-02-09. For the latest business changes, please refer to the official website of Ping An Bank.
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