Examples of competition in the economy. Monopolistic competition: examples

Studying the economy, students are faced with such a concept as competition. Examples can be found absolutely in any field of this science. In the specialized literature, competition is understood as competition between market participants. From this article you will find out what competition can be in the market, examples and conditions for the formation of its prerequisites.

For example, the rivalry of sellers of the same goods. Each of them is interested, that customers buy products from him, and not from a competitor. In the article the words "seller" and "producer" will be used in similar meanings, denoting by them the enterprise that provides services.

Strong examples of competition in the economy still better to consider in those market segments, where the producer has grown.

There are two types of competition: perfect and imperfect.

Perfect competition

It is understood as a state of the market in which no one can influence the price of the goods. It is understood that the value of the goods is determined only by the cost of production. With this type of competition, neither the state nor other sellers affect pricing.

In the current state of market relations, there is no perfect competition. Examples of it can be found only in books. In the market where there is such competition, there must be a large number of sellers who produce a product similar in characteristics.

Perhaps, if such a market existed, it would look like modern competition of firms. The examples would be slightly different, but the essence of the concept would remain the same.

Only in this variant can the price of a commodity be sensibly established. In addition, sellers will seek to increase their market share by improving product characteristics, service, marketing solutions.

Imperfect competition. Examples and types

In imperfect competition, everything is much more complicated than in the previous form. There are many different indicators that characterize such a situation of competition in the market - from regulation of prices by the state to various collusions of large market players. Unfair competition, examples of which will be indicated below, leads to industrial stagnation and does not stimulate the enterprise to develop.

It is divided into several subspecies: monopoly, monopolistic competition, oligopoly. We will analyze them in order.

Monopoly

This subspecies is considered to be the complete opposite of such a concept as perfect competition. Examples can be found in the oil and gas sector of the economy. Monopoly presupposes the existence of one seller in the market. It can be at the regional, national, international level. Such a kind is called "unfair competition". Examples can be: supply, transportation of natural gas, oil production and others.

Obligatory conditions for such competition:

1. The only seller. For example, in the fruit market there can be only one seller of bananas. All will buy only from him and on his terms, because there are no other sellers or they are prohibited by law.
2. The only product on the market. It is understood that there are no analogues of the sold product, and no one can replace it with anything.
3. There is no free market access to other sellers. This situation mainly happens because of the restrictions that the state establishes. That is, there is no prerequisite or legal possibility for functioning in the market of other enterprises in the monopoly sphere.

It should be noted right away that there is such a thing as a natural (natural) monopoly. This is such a subspecies of monopolistic competition, which is often formed artificially. Usually such a monopoly is created by the state itself in view of the large excess of benefits over negative moments. Such examples of competition in Russia: AOA Gazprom, OAO Rosneft.

Many economists agree that functioning on the market, a monopoly enterprise is not interested in improving the quality of its services, since there is no need for it. With this assumption, you can argue, because there are areas in which functioning from the economic side will be simply inefficient or completely impossible.

Monopolistic competition

Monopolistic competition, examples of which can be found in almost every sphere of the economy, are inherent in those markets where many sellers function. Merchants sell similar goods in their characteristics, but the products can not be called identical, and it is not able to completely replace the competitors.

The market on which there is a monopolistic competition, has its own characteristics that distinguish it:

1. Availability of various products that are similar in most characteristics. That is, the market is filled with homogeneous products. But at the same time, each has its own peculiarities, and to replace it with another option is 100% impossible.
2. The presence of a large number of sellers on the market. For example, there are many manufacturers of home appliances, but the products of each of them have their own technological features.
3. Significant competition among sellers, which does not affect their pricing policy, suggests that there is monopolistic competition in the market. Examples can be given for a long time, but the main thing is that there are no absolute substitutes. Let's return to the same TVs. Manufacturers are constantly improving their technology. Even those who produce approximately the same in terms of TV characteristics, set different prices. The buyer first of all buys not the device, but the brand, which he trusts. Therefore, manufacturers do not pay so much attention to the prices of competitors, as it could be with perfect competition.
4. Relatively easy access to enter the market for new sellers. There are few obstacles to this, and almost all who really want to get to it will be able to do this.

Examples of types of competition that are related to imperfect forms can be found even in your phone - these are SIM cards from one of the mobile operators. It is in this area that a large number of companies are trying to attract more and more customers.

Oligopoly

Oligopoly is called such a kind of competition, when in some market there are a small number of large sellers competing with each other. If 3-4 large companies are fully able to satisfy consumer demand, then such a market will have the following signs of oligopoly:

1. Market products can be both homogeneous and differentiated. In this case, the products of the metal rolling industry can be classified as a homogeneous oligopoly. Whatever the manufacturer, steel can not be made unique. Such products of one firm can be completely replaced by another product.
   An example of a differentiated monopoly is the tobacco industry. Cigarettes, despite their similarity, have their characteristics. This product can only be replaced in part.
2. High influence of sellers on the price of goods. Due to the fact that each seller occupies a rather large segment, one can say that the policy of one such large player has a direct impact on the entire market.
3. Entering the market for new sellers has barriers, but it's still real. Legislative requirements for sellers are possible, with respect to which access to the market is opened.

The following examples of competitive Russia can be cited: the sector of oil products and other energy carriers.

Also, it is worth highlighting several basic methods or schemes, with which various variants of imperfect competition appear. Some of them are quite natural, and some are created artificially by the sellers themselves or by the state.

There are six ways to distinguish.

Economic way

This path is a natural result of serious competition of major players. Gradually, enterprises absorb each other, increasing in size. Over time, players in the market is getting smaller, and the influence of each of them is increasing.

This method is the most dangerous, since collusion between enterprises is possible to raise prices for goods, which is done regularly. The state especially follows the markets where such tendencies are observed to protect the rights of a simple consumer, and that prices are always justified.

Advertising path

Here is an example of Coca-Cola. Advertising of this drink is so diverse and multifaceted that it can be found everywhere. Thanks to the large-scale advertising campaign, every child and almost every adult wants to drink. A PR-company about some "secret ingredient", which the company will never disclose, made the drink individual and unique. And as a result, there are no competitors for Coca-Cola, there are simply similar goods.

Innovative way

Some companies, carrying out their activities, constantly improve production processes, invest money in innovative technologies. All this leads to the fact that such enterprises start to stand out among others - they can produce more goods than competitors. At the same time, less money is spent on the production of one unit of goods. Hence the possibility of reducing the price of goods, which is fraught with the price reduction in certain sectors of the market. Competitors, whether they want it or not, will also have to reduce the price, perhaps even working at a loss.

Technological path

This path is similar to the innovative one. But in literature, it is singled out as a separate type and is understood as the increase in the efficiency of production and application of new technologies by large producers, which allows them to exercise even greater influence on the market.

The natural way

There are some areas in which so-called natural monopoly is present. Basically, it occurs in industries where there is a seller who can independently meet the needs of the entire market. And, using its technological capabilities, it can do this at a price that will be significantly lower than that of possible competitors.

The state road

It is one of the most negative, according to the statements of Western economists. It is characteristic where the state is most profitable to establish complete control over everything that happens in the market. Usually, special permits are used for market participants, without which enterprises can not function on it. In such a market, competition is completely limited or it simply does not exist.

All examples of competition in the economy prove that there are regularities in the market, which depend on the number of its participants, the level of state regulation of certain spheres of the economy, demand, supply and other factors.