Content

content

 

Introduction 3

1. The basic theory of competition . The basic market model 5-17

2 . Types of competition. 18-22

3 . Methods of competition : price and non-price .

Market and non-market forms 23-28

4. The role of government regulation in the formation of competitive market relations 29-35

5. conclusion 36

 

 

 

 

 

 

introduction

 

Competition in the translation from the Latin meaning " face " and can be defined as a contest between individuals and economic entities that are interested in achieving the same goal. If you specify this target in terms of the marketing concept , the market competition is called the struggle for companies limited purchasing power of consumers, leading firms in the market segments available to them .

Market nature of economic relations is the freedom of choice for the buyer and seller. The market mechanism works through supply and demand , which implies the necessary flexibility in prices, competitive products and therefore producers. Competition - is an integral part of the market environment , a necessary condition for the development of entrepreneurship.

The competition has both positive and negative aspects:

1) it contributes to the development of scientific and technological progress, constantly forcing the producers to use the best technology , efficient use of resources. During her flushed economically inefficient production , outdated technology , poor-quality goods;

2) it is very sensitive to changes in demand , leading to cheaper production costs, inhibits the growth of prices, and in some cases to reduce them ;

3) to a certain extent equalizes the rate of return on capital and the level of wages in all sectors of the national economy.

Among the negative aspects are:

1) gives businesses a certain instability, creates the conditions for unemployment, inflation and bankruptcy ;

2) leads to income inequality and creates conditions for their unfair distribution ;

3) it may be due to the overproduction of goods and reloaded production capacity during periods of recessions .

The competition involves the freedom of entry of economic units in any particular industry and the freedom and release it. This freedom is necessary for the economy to properly adapt to changes in consumer tastes , technology, or the supply of resources . The primary economic benefit of the market system is its constant promotion of efficiency.

In the years of planned economy in our country competition did not play the role that is given to it by market methods . Reference books, dictionaries and textbooks on the political economy of socialism on a regular basis to communicate to the complete elimination of competition and replacing it with conflict-free (or malokonfliktnym - with the winners and no losers ) socialist competition . Due to this the Russian economy has become not only a system vysokomonopolizirovannyh production , but literally in the amount of giant industrial subsistence farmers , providing their own everything you need : from secondary production to the social sphere. Ultimately, all this has led to low production efficiency, an excessively high level of costs , and in some areas to a deep technological gap with advanced scientific and technical developments.

From the point of view of the organization of the planned economy in the concentration of production monopolies regarded as the most effective way of managing and competition - the source of chaos and crisis of overproduction.

Today we understand that the fiercer competition in the domestic market, the domestic firms are better prepared to fight for markets abroad and those in a more advantageous position are consumers in the domestic market and the level of prices and quality products. After all competitive products must have the consumer characteristics, which she compared favorably with similar products from other competitors.

With the transition to the Russian market methods of managing the role of competition in the economic life of the community has increased significantly. In this case, the maintenance of a competitive environment in the Russian Federation, as well as in all developed countries today , has become an important task of the state regulation of the economy. So, study the competition , its role in the development of market relations is currently the most important task of economic research in our country.

The purpose of this study tell us about the evolution of the concept of "competition" with the development of economic theories , to show what role the state plays in the development and maintenance of competition in the market environment. 1. The basic theory of competition . Four models of the market.

 

Competing as an economic phenomenon emerged at the time of the establishment of trade relations and acquired its usefulness with the advent of a free market . At the same time, there were more holistic theoretical positions on the driving forces of competition. And the main credit for this - the classical political economy, and its chief representative of Adam Smith . He viewed the competition as a matter of course , permeates all sectors of the economy and is limited only by subjective factors.

Adam Smith identified the competition with the "invisible hand" of the market - automatically equilibrium of the market mechanism . He proved that competition by equalizing the rate of profit , resulting in the optimal allocation of labor and capital, the regulator of private and public interests. "... With the full freedom of enterprise , when each manufacturer pursues its own interests , and to strive for their own benefit does not arise chaos and confusion ... led by an invisible hand holding , pursuing their own interests , people create wealth and benefits to society as a whole" . [3]

Adam Smith believed that the purpose of the entrepreneur - is to get as much profit , and it is driven by self-interest . The laws of the market will force the entrepreneur does not produce any products , but only the ones you need customers, and sell them at the lowest possible price. Only in this case it will be able to defeat their competitors and maximize profits . Thus, although the owner did not think about the welfare of the society , however , his self-interest benefits everyone , because provides an abundance of goods and services of better quality and at lower prices .

The "invisible hand " can operate successfully only in a fairly tough competition . The mechanism of competition forces the entrepreneur to constantly look for ways to reduce production costs, otherwise it is impossible to reduce the cost and increase profits through increased sales .

Adam Smith on the example of price competition convincingly proved that the market economy is not driven by the collective will , not subordinate to a single concept , however , follows strict rules of conduct. In line with them , free competition in factor markets tends to equalize the benefits of these factors in all sectors and thus sets the optimal allocation of resources between sectors .

Despite the fact that Adam Smith did not consider the specific elements of the market mechanism , which often hinder the achievement of the optimum, it really made the first step to understanding the competition as an effective means of price regulation :

- Based on the theory of competitive prices formulated the concept of competition as a competition, raise prices (at reducing the supply ) and reduce costs ( in excess supply) ;

- Defined the basic conditions of effective competition, including the presence of a large number of sellers , comprehensive information about them , the mobility of resources used ;

- The first to show how the competition by equalizing the rate of profit , resulting in the optimal allocation of labor and capital across sectors ;

- Developed the elements of the model of perfect competition and theoretically proved that under these conditions the maximum possible satisfaction of needs;

- Has made a significant step towards the formation of the theory of optimum allocation of resources in conditions of perfect competition.

Free competition , the theoretical foundations of which Adam Smith postulated , completely eliminates any conscious control over the market processes . Coordinating element in his theoretical positions pricing system acts in a completely decentralized economy.

David Ricardo , developing the ideas of price regulation by market competition, built the most impeccable theoretical model of perfect competition in the functioning of the market system in the long term. This approach allowed us to get away from the " parts " associated with government regulation , market power , market and geographical features , etc., which in the long run is not critical .

For the conditions considered by David Ricardo , the principal is that the prices are formed only under the influence of supply and demand as a result of competition. Crucial in balancing price competition plays . Summarizes the elements of the study was the "law of markets" , which postulates a tendency equilibrium at full employment.

The idea of ​​perfect competition has helped to understand how the "natural" in the long-run equilibrium prices combined with the principles of decentralized management and the latter contribute to the development of the capitalist economy . Most definitely in this regard expressed Dzh.S.Mill : "Taking into account the fact that competition is the only regulator of prices, wages , rents, it in itself is a law that sets the rules of this regulation." They had made ​​a significant contribution to the theory of competition: the developed equation of international demand , highlighted the so-called non-competing groups in the market, given the tripartite classification of the price elasticity of demand, developed the concept of economies of scale , the opportunity cost .

Significant results that complement the model of perfect competition , but from the perspective of the law of value , offered in "Capital" Marx .

 

According to him , the competition , adjusting the allocation of capital across sectors , promotes tendency of the rate of profit to fall , the formation of the average rate of profit. "Equality of profit in all sectors of industry and the national economy presupposes complete freedom of competition and the free flow of capital from one industry to another . A private ownership of land creates monopoly hinders that free flow . By virtue of this monopoly , such as agricultural products , a lower organic composition of capital and a higher rate of return , do not go in a completely free process of the equalization of the rate of profit , the owner of the land, as a monopolist , can keep the price above the average, and this gives rise to monopoly price absolute rent .

The neoclassical school , the heyday of which goes to the XIX century, more accurately and fully presented the influence perfect competition in the pricing system. The economy of Western society became more centralized and the free price regulation at this stage of development, applied in practice as never before , attracting and inspiring many famous economists. Particularly significant in this sense can be considered neo-classical concept of A. Marshall . Building on the main provisions of the classics, it more consistently and fully justified mechanism to automatically establish equilibrium in the market with the help of perfect (pure) competition and the laws of marginal utility and marginal productivity . A. Marshall , however, went much further. The first time they have been criticized by "conditional" model of pure competition . The development of the theory of partial analysis and long-term sustainable balance in the market , and the accounting of technology and consumer preferences in determining the relative prices helped to create a new model of the basic theory of competition - monopoly .

Critics of the model of perfect competition, monopoly pointed to elements that permeate the economy and are not being reflected in the existing concept . The chronic shortage of effective balance of many European countries , a sharp slowdown in exports , an increase in the power of monopolies and other consequences of the first stage of the general crisis of the early XX century confirmed the failure of laissez-faire approach to the process of market balance.

Works Dzh.Robinson "Economic theory of imperfect competition " and E.Chemberlina "The theory of monopolistic competition," summed up the debate on the nature of pricing in a monopoly and the emergence of non-price formkonkurentsii . With all the dissimilarity of these works combine enough depth analysis and understanding of the market mechanism in the circumstances precluding the conditions of free competition. Both authors proceed from the assumption that the market price is formed not by the collective actions of market participants , as the heterogeneity of goods deprives the buyer the opportunity to have full information on prices , and manufacturers - to compete with each other because of the lack of choice more effectively.

Permission E. Chamberlain concept of " monopolistic competition " has become an alternative to the concept of " pure competition ." He argued that the essence of a monopoly control over the supply , and thus the cost, which is achieved by increasing interoperability of competing products , ie product differentiation . Wherever anywhere there is differentiation , each seller has a monopoly on their own product, but at the same time exposed to competition from substitutes. Accordingly, he believed that the situation of all the vendors right to speak as a " competing monopolists " in terms of the forces " monopolistic competition ."

In the development of his ideas about the process of " product differentiation " as a natural reaction of competitors on no less a natural manifestation of competition itself justifies E. Chamberlain 's growing influence on the process of non-price factors of competition, bearing in mind due to the special characteristics ( brand name , the uniqueness of gauge) and individual especially the quality of goods and advertising.

This means that withstand competition with the large economic entity and may be a monopolist and shallow ( average ) trader and manufacturer. "Monopoly is not necessarily a consequence of the financial control of production concentration and centralization of capital , because the market system characterized by intensifying competition trends ."

Unlike E.Chemberlina linking a monopolistic competition with one of the characteristics of the natural state of the market in balance, Dzh.Robinson seen in violation of imperfect competition and the loss of the normal equilibrium of the competitive economic system. In her work, she concludes that "the prevalence of the conditions in the real world of imperfect competition contributes to the tendency to use the factors of production and is enhanced by the formation of large associations, absorbing many companies compete with each other ... that contributes to an even greater injustice in the distribution of wealth" and destabilization socio- economic relations of the market environment . In an imperfect market individual firms can not achieve the optimal size , function efficiently , and "therefore, the monopolist has an opportunity not only to raise their prices by restricting output, but also to reduce production costs by improving the organization of production in the industry."

As a result of his research Dzh.Robinson could well draw conclusions on the specific measures of state intervention in the economy to address the identified its contradictions imperfect competition. A detailed justification of such measures within a few years was proposed by JM Keynes .

Theories of economic regulation in a market economy are two directions . One of them is based on the teachings of John Maynard Keynes and his followers. They recommend government intervention called " Keynesian ". Another trend justifies the alternative concept of Keynesianism , which the authors called neo-liberals .

According to many economists, "General Theory" by JM Keynes was a turning point in economic science in the XX . and largely determines the economic policies of countries and in the present. Its main idea is that the system of market-based economic relationship is not perfect and self-regulating , and that the maximum possible employment and economic growth can be achieved only active state intervention in the economy. He writes : "The state will have to provide their guiding influence on the propensity to consume partly through an appropriate system of taxes, partly by fixing the rate of interest , and perhaps in other ways ." Effectiveness of state regulation of economic processes , in the opinion of JM Keynes is dependent on raising funds for public investment , the achievement of full employment , reduce and fix the rate of interest.

The neo-liberal concept is based on the idea of ​​the priority conditions for unrestricted free competition, not in spite of , but because of a certain state intervention in economic processes. Neo-liberals advocate the liberalization of the economy , using the principles of free pricing , leading role in the economy of private property and private business entities. According to their statement : "The State to maintain conditions for the existence of a social market economy as an " ideal type " of the free market economy must enforce the " rules "of free competition , to control pricing conditions and prevent attempts to formation of monopoly prices , to guarantee the safety and priority of private property in the goods - money economy without monopolies . "

In recent years, a new assessment of competition has been given in the works of contemporary American economist who developed the theory of competitive advantage M.Portera . He defined the competitiveness of the goods from the point of view of the " value of the product for the consumer ." In his opinion, the value of any purchased goods directly related to the profits that will use it. " This value is very specific and can be accurately calculated . Customer value goods - this is the maximum price that the consumer finds it profitable to pay for it "[4 ] . Competitiveness is proportional to the product of the unpaid (or inherited the gift of the consumer ) part of the value chain (see Figure 1. ) .

 

Figure 1. The relationship value for the consumer , price and product competition .

 

Porter believes that everyone has a competitive product selling price lower customer value. For the consumer, the unpaid part of the customer value is received from the use of the goods of additional profit . For the supplier , it corresponds to the competitiveness of its products .

In this case, the consumer is interested in the fact that the unpaid interest was as much as possible . The attitude of the supplier to this value is twofold. On the one hand, it also benefits from its larger sizes substantial margin competitiveness ensures that it will be just purchased items , on the other hand , increasing and reducing selling price competitiveness supply it increases their profits.

If the provider is a monopolist , he prefers to inflate the price and the "margin of competitiveness" is equal to zero. On the highly competitive market of profit sacrifice for the sake of competitiveness.

Porter, in his " International competition " gave an estimate and an explanation of the competitiveness of some firms in the world market . According to him , the success of the firm in competition with rivals in the global market depends on the situation in the country. " With the amazing company of regulatory one - two countries achieve disproportionate success in certain sectors of the global market .... At the heart of the competitive advantages of each country is constant and consistent care of the national economy and its really efficient industries "

Depending on the ratio between the number of producers and consumers of the following types of competitive structures .

Table 1 Characterization of various types of markets.

 

 

Options	perfect competition	monopolistic competition	oligopoly	monopoly
The number of companies producing the product	A lot of independent firms , there is no control on the market	A lot of firms producing similar goods / services	Several firms producing goods / services	One product and one company
Price control   Almost complete control	No. Prices are determined by the market	Limited ability to influence change	There is the impact of the price leader	Almost complete control
product differentiation                                                                 ease of entry The relative easy entry and exit The relative easy entry and exit Difficult . Often requires large investments very difficult   example   Securities market The most common type of competitive environment   Cars, gasoline,   Electricity, gas	No Products can not be distinguished by the quality of the property	Products / services are differentiated by market segment	Essential for individual products, small for standard	no
Лёгкость входа	Относительный лёгкий вход и выход	Относительный лёгкий вход и выход	Трудный. Часто требует больших инвестиций	Очень трудный
Пример	Рынок ценных бумаг	Наиболее  распространенный вид конкурентной среды	Автомобили, бензин	Электроэнергия, газ