Lecture № 9Lecture № 9

Theme:Theme:

Competition and the Competition and the priceprice

План:План:

11. Essence of a competition, its . Essence of a competition, its economic bases and the purposes.economic bases and the purposes.

2. Competition forms. Made and 2. Competition forms. Made and imperfect.imperfect.

3. The antimonopolistically legislation 3. The antimonopolistically legislation and its value for market development.and its value for market development.

4. The price and its functions. The 4. The price and its functions. The mechanism of pricing in the conditions mechanism of pricing in the conditions of the market.of the market.

Competition - struggle Competition - struggle between commodity between commodity producers for more producers for more favourable conditions of favourable conditions of managing, for reception managing, for reception of the maximum profit.of the maximum profit.

There are following forms of a There are following forms of a competition:competition:

The pure competition – is characterised The pure competition – is characterised by presence of numerous sellers and the by presence of numerous sellers and the

buyers who are engaged in sale and buyers who are engaged in sale and purchase of a homogeneous product.purchase of a homogeneous product.

..

The perfect competition (free) is The perfect competition (free) is characterised by a number of characterised by a number of

lines:lines:Mobility of resources in the marketMobility of resources in the marketFree input and exit on the marketFree input and exit on the market

Independence of actions and Independence of actions and sellers from each othersellers from each other

Uniformity of made productionUniformity of made productionIn volume of realised productionIn volume of realised production

Availability and the full Availability and the full information on the prices.information on the prices.

The effective competition (real) The effective competition (real) arises, when buyers and sellers arises, when buyers and sellers operate independently, even operate independently, even under a condition when the under a condition when the

market is not purely or absolutely market is not purely or absolutely competitive.competitive.

The imperfect competition has The imperfect competition has arisen in the end of 19 beginning arisen in the end of 19 beginning

20вв. In connection with formation 20вв. In connection with formation of monopolies. The basic lines of a of monopolies. The basic lines of a monopolistically competition are monopolistically competition are

high monopoly prices and high monopoly prices and exclusive profits.exclusive profits.

Distinguish following kinds of a Distinguish following kinds of a monopolistically competition: monopolistically competition: monopsonija - Type of market monopsonija - Type of market structure at which there is a structure at which there is a

monopoly of the unique buyer of monopoly of the unique buyer of the certain goods. Limiting the the certain goods. Limiting the

purchases, the buyer provides to purchases, the buyer provides to itself exclusive profit at the itself exclusive profit at the

expense of loss of a part of the expense of loss of a part of the income of the seller.income of the seller.

олигопсония – type of market олигопсония – type of market structure at which there is a group structure at which there is a group

of buyers of the certain goods.of buyers of the certain goods.

олигополия – type of market олигополия – type of market structure at which structure at which somesome large firms large firms monopolise manufacture and sale monopolise manufacture and sale of a great bulk of production and of a great bulk of production and

conduct among themselves mainly conduct among themselves mainly not price competition.not price competition.

дуополия – type of market дуополия – type of market structure at which there are only structure at which there are only two suppliers of the certain goods two suppliers of the certain goods

and between them completely and between them completely there are no monopolistically there are no monopolistically agreements on the prices, a agreements on the prices, a

commodity market, manufactures.commodity market, manufactures.

monopoly (bilateral monopoly (bilateral monopoly) – the type of monopoly) – the type of market structure arises an market structure arises an antagonism of the uniform antagonism of the uniform supplier and the uniform supplier and the uniform (incorporated) consumer (incorporated) consumer

Any rivalry is based on Any rivalry is based on application of the price application of the price

mechanism.mechanism.The price competition – is The price competition – is

characterised by price characterised by price discrimination on realised a discrimination on realised a product which is possible. product which is possible.

There is also not price There is also not price competition which is carried competition which is carried out by means of perfection out by means of perfection of quality of production and of quality of production and conditions of its sale (sale). conditions of its sale (sale).

Not price competition is carried Not price competition is carried out in different directions: out in different directions: The first - perfection of a The first - perfection of a

technical aspect of the goods: technical aspect of the goods: the second – improvement the second – improvement

приспособляемости the goods приспособляемости the goods to needs of the consumer.to needs of the consumer.

By working out of the By working out of the antimonopoly law and other antimonopoly law and other actions directed on restriction actions directed on restriction of action of monopolies the of action of monopolies the state starts with an overall state starts with an overall objective – to promote objective – to promote expansion of a free expansion of a free competition.competition.

The antimonopoly policy provides The antimonopoly policy provides following restrictive directions:following restrictive directions:

Market monopolisation evidently Market monopolisation evidently (any corporation has no right to (any corporation has no right to

sell in the market more than 60 % sell in the market more than 60 % of sales and to focus more than of sales and to focus more than

40-50 % of manufacture).40-50 % of manufacture).Fixation of the prices (the co-Fixation of the prices (the co-

ordinated actions of the several ordinated actions of the several companies on an establishment of companies on an establishment of the prices and volumes of output the prices and volumes of output

and sales are forbidden).and sales are forbidden).

It is impossible to hold more certain It is impossible to hold more certain share of other corporations.share of other corporations.

Merge of the companies therefore Merge of the companies therefore the new company liquidating a the new company liquidating a

competition is formed is forbidden.competition is formed is forbidden.

It is forbidden intertwining It is forbidden intertwining директоры (it is impossible to be директоры (it is impossible to be

the councillor of directors of 2 the councillor of directors of 2 companies competing among companies competing among

themselves).themselves).

е) запрещается ценовая дискриминация (товары е) запрещается ценовая дискриминация (товары всем должны продаваться по одной цене).всем должны продаваться по одной цене).

ж)запрещаются связанные контракты (продавец ж)запрещаются связанные контракты (продавец какого-либо товара не должен ставить условием какого-либо товара не должен ставить условием его приобретения покупку какого-либо другого его приобретения покупку какого-либо другого товара).товара).

з) запрещаются исключительные контракты (т.е. з) запрещаются исключительные контракты (т.е. если они оговаривают, что розничный торговец, если они оговаривают, что розничный торговец, покупающий товар у него конкурента, то такая покупающий товар у него конкурента, то такая сделка считается недействительной).сделка считается недействительной).

The price – term of money of The price – term of money of cost of the goods.cost of the goods.

The price is the sum of The price is the sum of money raised for the goods.money raised for the goods.

Price functions:Price functions:

- Maintenance of the market - Maintenance of the market

Balance Balance- Registration-settlement- Registration-settlement- An economic regulator- An economic regulator

- Competition means- Competition means- Social protection - Social protection

There are three main objectives There are three main objectives of pricing:of pricing:

- Growth of realisation and share - Growth of realisation and share maximisation in the marketmaximisation in the market

- Profit maximisation- Profit maximisation

- Maintenance of the break-even - Maintenance of the break-even

Existence.Existence.

The greatest impact on a price The greatest impact on a price establishment is allocated five establishment is allocated five major factors making: major factors making: consumers, the government, consumers, the government, participants of trade channels, participants of trade channels, competitors, production costs. competitors, production costs.

The law «About a The law «About a competition and competition and restrictions of restrictions of monopolistically activity monopolistically activity in the commodity in the commodity markets» 1.01.1997г. markets» 1.01.1997г. According to this law the According to this law the organisation on organisation on competition protection competition protection «Committee on «Committee on demonopolization and demonopolization and competition competition development operates development operates