What is market concentration. A system of indicators evaluating the economic concentration of the market

Determining the Size of an Enterprise

Indicators of the level of concentration are built on the basis of comparing the size of the enterprise (firm) with the size of the market in which it operates. The higher the size of firms compared to the scale of the entire market, the higher the concentration of producers (sellers) in this market.

The problem is to answer the question: what can be considered the size of the enterprise? There are four main indicators that characterize the size of the firm in relation to the size of the market:

The share of the company's sales in the market sales volume;

The share of employees at the enterprise in the total number of people employed in the production of this product;

The share of the value of the firm's assets in the value of the assets of all firms operating in the market in question;

The share of value added at the enterprise in the sum of the value added of all manufacturers operating in the market.

The results of calculating the concentration indicators can significantly depend on the choice of a firm size measure. For example, if large firms use more capital-intensive technologies than smaller firms, then the level of concentration measured in terms of asset values will be greater than the level of concentration for the same industry, but measured in terms of sales or employment. The level of concentration, expressed in terms of value added, will be influenced by vertical integration. If large firms are integrated into more than medium and small ones, then using value added as an indicator of firm size will give more high level concentration than sales volume. In addition, there is the problem of diversification: for firms whose activities take place in different sub-sectors and on different markets, it is difficult to isolate the employment, sales, or value added in a given market.

Sometimes the size of the largest firms can serve as a measure of market concentration. It is this criterion that underlies the definition of a dominant position in Russia (a sign of dominance is control of at least 35% of the market), in the UK (respectively, at least 25% of the market). .

Producer concentration and economies of scale

The concentration of producers in industry markets leads to an increase in the size of firms. Following Wiener's study of cost curves, in the analysis of the industrial organization of markets, it is customary to assume that the size of firms and their number in an industry are related to the level of returns to scale of production. This, as a rule, manifests itself in the fact that large market participants manage to produce and sell products at lower average costs than relatively small manufacturers can afford. The cost savings from increasing scale of production is called economies of scale. Quite often, economies of scale are analyzed from three points of view:

release of one type of product;

release of all products of one enterprise;

output of the company, consisting of several production units.

Each of these aspects requires special consideration. We will only note the general points. These include, first of all, the fact that large firms are able to reduce interruptions in the production process. This is expressed both in the reduction of equipment setup time per unit of manufactured product, and in a more rational organization production activities, and in the growth of the experience of the company's employees.

In addition, with the increase in the scale of production, unit costs decrease due to the fact that, although overhead costs in efficient firms increase, the share of unit costs decreases. The wholesale purchase of resources allows large firms, on the one hand, to achieve a reduction in prices for resources, on the other hand, to use them more rationally. In addition, large firms have established stable relationships with both suppliers and distribution organizations and transport companies.

It should also be borne in mind that in large firms, as a rule, more qualified engineers, specialists, and workers are concentrated, since they are able to provide a decent level of remuneration and provide an opportunity to work on advanced technology.

IN

place, however, the growth of the size of the enterprise is not unlimited. Learning curves tend to flatten as firms grow. The growth of remuneration for work is gradually suspended. The need for labor force leads to the expansion of the geography of its attraction. Rationality of processing resources when using traditional technology gradually reaches a certain stabilization. The speed of delivery of resources to the company decreases and delivery becomes more complicated finished products. Yes, and managing a large unit is more difficult than a small one. Consequently, all types of expenses are growing. This means that economies of scale have their limits. Hence the need arises optimal combination the growth rate of the firm and the change in production costs per unit of output. As foreign researchers note, the shape of the graph of the function of long-term average costs depending on the growth in production becomes as shown in Fig. 2

Fig. 2 A typical graph of the function of long-term average costs depending on the growth in production volume:

LRAC - long run average cost curve

Up to a certain minimum effective level output (in Fig. 2, this is segment OA), the economies of scale are significant, which manifests itself in a decrease in average costs as production volumes and scales of output increase. With the help of organizational and technological transformations, it is possible to slightly increase the size of the company beyond the segment OA, however, at point B, the negative consequences of excessive growth in the scale of production occur and an increase in average costs will be observed.

Thus, economies of scale are always historically specific and depend on how quickly the technology of production changes, how intensively the company's management system is improved, how accurately the top management of the company catches the point at which the attitude towards the growth of the scale of production should be changed.

Not all firms manage to take advantage of economies of scale, but only a few lucky ones. And those firms that succeed, obviously, have a different mechanism for reallocating resources. Consequently, in the structure of the industry market, there is no homogeneity in the nature of firms, at least in relation to the extent to which each of them is able to take advantage of economies of scale.

The scale effect is schematically shown in Figure 3.

Concentration indicators and its assessment

The concentration index is measured as the sum of the market shares of the largest firms operating in the market:

where Yi is the market share of the i-th firm;

k is the number of firms for which this indicator is calculated.

The concentration index measures the sum of the shares of the k largest firms in an industry (with k , n is the number of firms in the industry). Market share is measured in relative shares (0

This feature of the concentration index is associated with a possible inaccuracy in its use.

The insufficiency of the concentration index to characterize the market power potential of firms is explained by the fact that it does not reflect the distribution of shares both within the group of largest firms and outside it - between outsider firms. To solve this problem, the countries of the European Economic Community actively use the Lind index, which characterizes the ratio of the shares of the largest firms in the market. In addition, other indicators of concentration provide additional information about the distribution of the market among firms.

The Herfindahl-Hirschman index is defined as the sum of the squared shares of all firms in the market:

The index takes values from 0 (in the ideal case of perfect competition, when there are infinitely many sellers on the market, each of which controls an insignificant share of the market) to 1 (when there is only one firm producing 100% of the output on the market). If we consider market shares as a percentage, the index will take values from 0 to 10,000. The larger the index value, the higher the concentration of sellers in the market.

Since 1982, the Herfindahl-Hirschman index has been the main benchmark in the implementation of US antitrust policy. Its main advantage is the ability to react sensitively to the redistribution of shares between firms operating in the market. Table 4 shows how the value of the Herfindahl-Hirschman index changes with an increase in the share of the largest firm in the market. If the shares of all firms are the same, then HHI=1/n

An increase in the market share of the largest firm, for example from 40 to 70%, causes an increase in the value of the Herfindahl-Hirschman index much more significant than from 1 to 30% (0.16-0.49 vs. 0.0001-0.09, by 33% points vs. 8.99). This growth adequately reflects the strengthening of monopoly power as the large firm captures an increasing share of the market. The Herfindahl-Hirschman Index provides information about the comparative ability of firms to influence the market under different market structures. The market power of the dominant firm in a competitive environment that controls 50% of the market is comparable to the market power of each of the four oligopolistic sellers. Similarly, on average, each of the duopolists that control the market will have approximately the same power to influence the market price as the dominant firm that controls 70% of the market.

Table 1. Dependence of the Herfindahl-Hirschman index on the market share of the dominant firm

The value of the Herfindahl-Hirschman index is directly related to the dispersion measure of firms' market shares, so that:

where n is the number of firms in the market;

s2 is the dispersion indicator of the firm's market shares, equal to ;

where Y is the average market share of the firm, equal to 1/n.

The above formula allows us to distinguish between the influence on the Herfindahl-Hirschman index of the number of firms in the market and the distribution of the market between them. If all firms in the market control the same share, the dispersion index is zero and the value of the Herfindahl-Hirschman index is inversely proportional to the number of firms in the market. With the same number of firms in the market, the more their shares differ, the higher the value of the index.

The Herfindahl-Hirschman index, due to its sensitivity to changes in the firm's market share, acquires the ability to indirectly indicate the amount of economic profit received as a result of exercising monopoly power.

Below we will show the relationship of the index value with the Lerner indicator of monopoly power.

The entropy index shows the average value of the logarithm of the reciprocal of market share, weighted by the market shares of firms:

The entropy coefficient is the reciprocal of concentration: the higher its value, the lower the concentration of sellers in the market.

To measure the degree of inequality in the size of firms operating in the market, the spread indicator of the logarithms of the market shares of firms is used, the dispersion index:

where Yi is the firm's market share;

Y - the average share of the firm in the market, equal to 1/n;

n is the number of firms in the market.

The greater the spread, the higher the concentration of sellers in the market. However, the spread of logarithms does not provide a measure of the relative size of firms; for a market with two firms of the same size and for a market with 100 firms of the same size, the spread of the logarithms in both cases will be the same and equal to zero, but the level of concentration will obviously be different. Therefore, log scatter can only be used as an aid to estimating inequality in firm size rather than estimating the level of concentration.

The Gini index is a statistical indicator of the form

where Yi is the volume of production of the i-th firm;

Yj is the volume of production of the j-th firm;

n is the total number of firms.

The Gini index can be conveniently illustrated using the Lorenz curve. The Lorentz curve, which reflects the uneven distribution of any attribute, for the case of concentration of sellers in the market, shows the relationship between the percentage of firms in the market and the market share, calculated on an accrual basis, from the smallest to the largest firms.

The Gini index can be expressed as follows:

The calculation of the Gini index shows that in this case it is approximately 0.18. The higher the Gini index, the higher the uneven distribution of market shares among sellers, and, therefore, ceteris paribus, the higher the concentration indicator.

When using the Gini index to characterize the concentration of sellers in the market, two important points should be taken into account. The first is related to the conceptual flaw of the index. It characterizes, as well as the indicator of the spread of logarithms of shares, the level of uneven distribution of market shares. Therefore, for a hypothetical competitive market where 10,000 firms share the market into 10,000 equal shares, and for a duopoly market where two firms share the market in half, the Gini will be the same. The second point is related to the complexity of calculating the Gini index: to determine it, it is necessary to know the shares of all firms in the industry, including the smallest ones.

In economic theory and practice, there is no single indicator of the level of concentration in an industry. In different studies and for different purposes, different indicators of the concentration of sellers in the market can be used. To assess the merits of the concentration index, the rules proposed by Hanna and Kay are applied.

An ideal measure of seller concentration should meet the following requirements.

Let the concentration indicator be calculated not for n firms in the market, but for k firms with k< n, причем фирмы ранжированы по убыванию рыночной доли. Если концентрация продавцов на рынке A выше, чем на рынке В, значение идеального показателя для рынка А должно быть больше при любом k.

If the share of a large firm increases at the expense of a small firm, then the concentration indicator increases.

The entry of a new firm into the market lowers the level of concentration (provided that the size of the firm is below some significant level).

Mergers and acquisitions increase the degree of concentration.

The Herfindahl-Hirschman and entropy indices meet all the above conditions. Other indexes are partly consistent with these conditions.

Table 2 discusses scientific approaches to managing the concentration of production.

Table 2 - The main elements of scientific approaches to the management of the concentration of production

	Technological	Typological	Systemic
	Technological	Typological	System-Complex	System-Synergetic
Basis of classification	Production technology	Type of enterprises	Directions for increasing the volume of output	System elements
Object of study	Part of the enterprise, its operating subsystem	Enterprise as a whole
Relationship	They note the organizational connection of concentration with other forms of organization of production
The nature of the manifestation of forms	Specific forms of production concentration	Unified nature of concentration forms	Universal character, assuming a multivariate state	Universal character, taking into account the specificity of the functioning of organizations
Specificity of development	There are industry, market and product specifics	Missing	Manifested in the multivariate combination of forms	Polymorphic nature of the combination of forms, taking into account the specifics of relationships
Direction of development	From simple forms (aggregate) to more complex (factory)	The process is reflected in one of the final forms, which does not imply further development.	Assumes many states, with the possibility of transition into each other.	Assumes many states directed in a single direction of development
Dominant form of production concentration effect	Scale effect of production		Scale effect of production, integration effect	synergy effect, economies of scale
Effect of scale of production	It is achieved by eliminating "bottlenecks" in the technological chain.	Achieved through the integrated use of resources	Achieved through efficient organization of the production process	Based on the complementary effect of the resources involved.

Conclusion

Market concentration (concentration of sellers or buyers) is understood as the density of market structures and the totality of different shares of market agents in terms of supply and demand. A small number of firms in the market, and hence their low density, indicates a high level of concentration of sellers. In the limiting case, the density is equal to unity, i.e. corresponds to a monopoly market. For a given number of firms in the market, the more they differ from each other in terms of the volume of sales of goods, the higher the level of concentration of sellers in the market.

Similar dependencies are also typical for the assessment of the concentration of buyers in the market. The fewer buyers in the market, the higher the level of their concentration. In the limiting case, the density of buyers is equal to one, i.e. corresponds to a monopsony market. For a given number of buyers, the more they differ in terms of demand, the higher the concentration of buyers in the market.

Methods for analyzing the evolution of structure (in terms of concentration) for the market and production are different. In the first case, the focus is on competition and the potential for market capture. The second measures either the distribution of subjects of production by size or geographically.

It can be assumed that under these conditions, the obvious directions of market evolution will be both the rapid growth in the number of new small companies, which include a single enterprise, and the further downsizing of very large old production structures. Under equal conditions, this will lead to a further decrease in concentration, which is partly observed today.

Summarizing the above in this control work, it is easy to conclude that the concentration of production is influenced by a combination of many factors. Their number and ratio, in relation to the conditions of a particular time and place, may be different. Factors of concentration of production are among the dynamic ones. The change in their composition and nature occurs due to changes in factors. Their number and ratio depend on the characteristics of the economic system of society and the nature of the social system as a whole, the progressive development of scientific and technological progress, the economic and geographical conditions of a particular territory, and many others.

An increasing share in the economy of most countries is beginning to acquire the sphere of non-material production, or, as it is sometimes called, the service sector. It should rightfully enter into social production, since it is important for society to produce not only the means of life, but also to carry out the production of life itself in all its forms. That is why such spheres as health care, education, information services, and others are becoming more and more significant in the composition of social production. Objects representing the named and other spheres of social production are also subject to concentration in the geographical space with all the laws inherent in this process.

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CR concentration index- This is an indicator that characterizes what market share falls on a given number of the largest players.

Since the concept of "a given amount" looks rather vague, a number is added after the letters CR, which shows how many of the largest market players are in question.

So the following are (mostly) used CR concentration indices: CR2, CR3, CR4, CR5, CR8, CR10.

In principle, the number of "largest players" can be anything. IN Everyday life Have you often come across, for example, the "list of the 100 richest people", "the 500 most large companies", etc. It all depends on the goals that the researcher sets for himself.

CR concentration index formula

Market concentration index CR (concentration ratio) is defined as the sum of the market shares of the n largest companies. The higher the value obtained, the closer it is to 100, the more monopolized the market.

Features of using the concentration index (CR) for practical purposes

Since the concentration index is an arithmetic sum, it actually ignores the distribution structure of market shares between companies included in the index calculation.

Imagine that we have determined that in this market CR5 = 80, that is, the five largest companies occupy 80% of the market. Everything seems to be clear, but...

This may be the situation "16+16+16+16+16", or maybe "60+15+3+1+1". Agree, in this situation we are talking about a fundamentally different distribution of "power of influence" on market processes! A good example to illustrate the shortcomings of the concentration index is practical example of calculating the concentration index CR .

Thus, the concentration index must be used as a kind of addition to other economic indicators or the number (n) of companies should be selected in such a way as to objectively correspond to the structure of the distribution of forces in the market.

Due to the disadvantages listed above, the concentration index not used as the main indicator. In the United States, the Herfindahl-Hirschman index is used instead, and in European Union- index (coefficient) Linda.

For the purposes of the overall evaluation situations concentration index (CR) very acceptable. Any business plan contains a description of the "major competitors" and the market share that they account for. In the periodical press, the phrase "X% of the country's inhabitants account for Y% of income" also makes it possible to present the situation quite clearly.

There are several predictions in the structure-behavior-efficiency model. First, with an increase in the level of concentration in the banking services markets, the profits of banks should grow. In addition, banks will charge higher interest rates on loans, pay lower deposit rates, and make smaller loans than if the market were less concentrated. Consequently, most researchers of the structure-behavior-efficiency model emphasized the possible relationship between market concentration and bank profits. The conclusions of these researchers are different. Many of them came to the conclusion that a high degree of concentration leads to an increase in bank profits, as predicted by this model. Others do not support this point of view. Thus, there is no consensus on the adequacy of the structure-behavior-efficiency model. However, most economists agree that research findings generally support the notion that the distribution of banks by number and size affects the rate of interest banks charge on loans and pay on deposits.

This theory is carried out in several studies carried out in the 1980s. The authors of these studies found that concentration in the banking market was not the main contributor to firms' profits. In fact, it has been proven that market concentration by itself had nothing to do with profit. What really mattered was the market share of each firm. In turn, the shares of the banking services market reflected the relative efficiency of banking competition in the market. Thus, the authors of these papers concluded that the effective structure theory is preferable to the structure-behavior-efficiency model.

Definition constituent parts market for a given bank is thus a generally important but controversial issue. This is important because the measurement of factors such as market concentration depends mainly on the definition of the market. This problem is controversial and complex, since there is no unity among economists regarding better definition market.

Competition. A market that already has strong competitors is not well suited for intrusion by foreign entrants. The volatility of existing competition also reduces the attractiveness of foreign markets. Particularly unattractive are highly volatile markets with many competitors entering and exiting, and high market concentration (i.e., high market share in the hands of the top few companies).

Timely market entry options are considered to be those that can be implemented within two years from the start of preliminary planning to the realization of a significant market impact. A significant impact on the market can be considered such an impact, in which a real decrease in market concentration indicators is achieved and, accordingly, the ability of each market entity to influence the market unilaterally is weakened.

Marketing. The marketing manager is the link between the company and its customers and competitors. His main concern is the choice of market position and the marketing mix of the enterprise. The choice of a market position is the definition of the scope of market concentration based on the use of the concepts market, product, geographic location. Based on market research, a company can segment the market in order to determine which market niches to serve, which new products to develop, and how to ensure that the products in the company's product range do not directly compete with each other.

There are three levels of market concentration. The first level is related to time and responsibility. Most people think that's it. This is not true. YOU should focus on just a few markets first and then focus on the approach. Most traders follow too many markets with too many systems or approaches, becoming unfocused and unprofitable.

Can market concentration be explained by economies of scale?

Proponents of the traditional view of advertising see it as a tool that increases the market share of a successful advertiser and enhances loyalty to a given brand. The result of this is an increase in market concentration as the successful advertiser's demand curve shifts to the right from D to D2 and becomes less elastic, as shown in Fig. but. New look advocates see advertising as a way to notify the consumer of substitute products, which increases competition. Accordingly, advertising in the industry causes the demand curve of each firm to shift to the left from D3 to D4 and become more elastic, as shown in Fig. b.

Economies of scale at the plant level and market concentration

MARKET CONCENTRATION AND MONOPOLY POWER

It is the presence of barriers to entry, combined with the high level of concentration of producers in the industry, that enables firms to raise prices higher. marginal cost and receive positive economic profit not only in the short run, but also in the long run, which determines the bargaining power of these firms. Where barriers to entry do not exist or are weak, firms, even when market concentration is high, must take into account competition from actual or potential rivals.

The entropy index will take values from zero to infinity, reflecting the degree of diversification of the firm. In this case, in contrast to the measurement of market concentration, it is more appropriate to use the absolute rather than the relative entropy index. The number of products produced, which has a significant impact on the value of the index, in itself reflects the level of diversification.

On fig. Figure 19.2 presents a simplified causal model that combines various hypotheses about the contribution of advertising to the process of reducing the level of competition in the market. The model introduces several key concepts such as market concentration (market share in the hands of leading firms), barriers to entry (such as potential competitors in an industry), and product customization (giving a product characteristics that distinguish it from similar products from other firms).

The central element of the model is market concentration. The main argument is that when concentration exists, there is little incentive to engage in vigorous price competition, resulting in high prices and profits. When price competition is banned, there are hypothetical incentives to engage in intense non-informative advertising, the cost of which is passed on to the buyer in the form of high prices. The lowered price of wholesaler or retailer brands is cited as an obvious result of such high prices.

Give examples and calculate the Lerner Index and the Market Concentration Index.

To assess the scale of market concentration, economics uses various methods, but most often they come from information about what share of sales in the market falls on each of the competing firms. And the fewer firms provide the bulk of the sales of goods, the higher the degree of market concentration and the more difficult it is for buyers to achieve their interests. According to US statistics, for example, the least monopolized industries in the US are the production of clothing for women and girls, as well as the production of soft drinks. The most monopolized industries (along with the automotive industry) are the production of refrigeration equipment and the manufacture of artificial fibers.

Barriers to market entry. What determines and why the degree of market concentration changes The most general answer is the "height" of the barriers that any entrepreneur who wants to enter a particular commodity market must overcome.

In some cases, an increase in market concentration turns out to be relatively beneficial for society, since an increase in the volume of output of goods by one firm allows you to use the "scale effect" and thereby achieve a reduction in the cost of production of goods and their prices. This is one of the main reasons explaining the constant decline in prices for some mass-produced goods (computers, radio electronics, cars, etc.).

In the period after the Second World War, as part of the marketing and public policy considered legal aspects marketing activities . The main attention was paid to the problems of collusion and competition, the issues of market concentration and price discrimination were discussed. In addition, the problem of false advertising persisted, and opposition to it intensified during the Great Depression.

Market concentration (market on entration) - the share in the total volume of loans and deposits, which provides several large banks with a dominant position in the banking markets.

HERFINDAL INDEX - Market concentration index is calculated by squaring the percentage market shares of each firm and summing the results. DOW-JONES INDEX - indexing that allows you to evaluate the movement of exchange resources on all exchanges. Associated with former Wall Street Journal editor-in-chief X. Doe, who created this index in 1887 by first adding

Introduction. 2

Market definition. five

Definition of an indicator of the size of the enterprise. nine

Producer concentration and economies of scale. eleven

Indicators of concentration and its assessment. fourteen

Conclusion. 22

Literature.. 24

Introduction

One of the main directions in the development of the economy for many years has been the consolidation of its subjects. Enterprises are no longer united only within the framework of an industry or a state. Transnational associations are emerging.

The concentration of production in a general sense is the association of factors of production around one center.

Geographical concentration - the desire of enterprises to settle and develop in those places where other enterprises are already located.

Until relatively recently, the geographical concentration of enterprises was a phenomenon characteristic of the process of industrial development; the desire to achieve the highest profitability and, consequently, cost reduction forced to look for the most suitable place for this:

Located next to the factors of production, namely, sources of raw materials, sources of energy, semi-finished products produced by enterprises already settled there, labor;

Favorable in terms of sales: the presence of a consumer market, the possibility of convenient connection to the transport artery.

Today, these factors no longer matter: the progress made in the field of transport (in technical terms- this is an increase in speed and reliability, in economic terms - a decrease in cost) makes enterprises, in terms of their location, less dependent on energy sources and raw materials, and even on sales markets. Moreover, the concentration of population in cities, which naturally occurred along with the concentration of development industrial enterprises, entailed such expenses (social sphere) and negative consequences(the decline of entire regions) for the local population and authorities, that governments are trying to slow down the process of geographical concentration and even stimulate the decentralization of industry.

Economic concentration - the desire to increase the size of enterprises.

In principle, the process of economic concentration of enterprises seems to be largely independent of the economic and social order, since it is caused by the desire to provide more high profitability by reducing costs, which naturally leads to an increase in the productive capacity of enterprises in order to achieve higher labor productivity. However, the forms, methods and target orientation of the process can differ significantly depending on the economic and social system under which it takes place.

In countries with a capitalist system, this process is associated with the desire to obtain maximum profit, that is, to achieve profitability only in the sense in which it is understood by the leaders of the enterprise. It is implemented either through the enterprise's own expansion, increasing the size or number of its institutions, or through more or less close integration with other enterprises. Consolidated enterprises may take various forms- trusts, cartels, concerns, holdings, conglomerates, etc. etc. In the region of Agriculture this process is manifested mainly in the increase in the size of farms, occurring spontaneously or as part of government programs(measures to enlarge farms). True, the concentration of agricultural structures is met with resistance from the rural population, seeking to protect small family farms.

The process of concentration, which takes place in different ways in different sectors of the economy and in different countries, is not, however, infinite. First of all, it has a technical limit: within a given market, a rational combination of production factors presupposes the presence of a certain optimal size of an enterprise, the excess of which entails a decrease in profitability as a result of the emergence and growth of negative phenomena (waste of resources, inconsistency of actions, complication management structures). In addition, governments may be forced to suspend or limit the process of concentration to the extent that it is naturally accompanied by tendencies towards monopolization. The pursuit of maximum profit, in fact, forces enterprises to extract all possible benefits from the market and at the same time, at a certain stage of the concentration process, subordinate it to themselves, thereby reducing the impact of competition and even completely eliminating it. That is why there is antitrust law, applied, albeit with greater or lesser degree of determination and effectiveness.

In the capitalist countries the process of concentration took on an international dimension and led to the formation of associations for which there are no borders and which today are usually called transnational corporations; the oil trusts are a particularly striking example.

Viewed from this perspective, the process of concentration of enterprises, we can say that it should develop with greater flexibility and at the same time more consistently, giving preference to the principles of free, natural expansion and technological compatibility of production units.

In any socio-economic system, the process of concentration can take two forms:

Horizontal concentration, in which enterprises operating at the same stage are combined this process production;

Vertical concentration, in which enterprises are combined that are involved in business at different stages of the production process or engaged in different but complementary activities.

Market definition

The market is the basic concept of microeconomic analysis. It is in the market that firms interact. Parameters market equilibrium and the possibility of changing it are of primary interest to the researcher. However, in practice it is not easy to determine the boundaries of the market. The market for product X is a set of sellers and buyers of product X. Speaking of "product X", we can mean both a single product and a group of substitute products.

It is possible to err in the direction of underestimating the number of goods that belong to a given market, arguing, for example, that the market involves the sale of only a homogeneous product. In this case, the market will be defined too narrowly, such as the Tide laundry detergent market. The company that manufactures the washing powder, will look like a monopolist in such a market. In fact, despite the difference in consumer characteristics of various brands of washing powders and detergents, companies producing these goods will compete vigorously with each other.

It is also possible to err in the direction of an overly broad interpretation of the market: two goods belong to the same market if they are substitutes (substitutes). In this case, the firm's monopoly power in the market is underestimated, because goods always differ either in quality, or in the place of sale, or in availability for a certain category of consumers, or in the availability of information about the product. In the limit, the entire economy can be represented as a single market, where different goods to some extent replace each other. However, this approach is unacceptable for characterizing the forms and methods of competition and the monopoly power of firms in the market - which is the subject of the theory of industrial organization.

The definition of the market is related to the purpose of the study. For example, if coal mining is being considered for an energy policy effectiveness study, then the electricity market should be defined broadly, i.e. consider simultaneously the extraction of coal, gas, oil and the production of atomic energy. If mergers of two coal mining companies are analyzed, then the coal industry should be interpreted in the narrowest sense.

Market identification will obviously depend on the breadth or narrowness of its boundaries. There are several types of market boundaries: commodity (product) boundaries, reflecting the ability of goods to replace each other in consumption; time limits associated with significant change conditions of supply and demand in time; geographic boundaries. The required breadth or narrowness of boundaries in each particular case depends, firstly, on the characteristics of the product, and secondly, on the goals of the analysis. Thus, for a durable good, the time limits of the market will be much broader and less definite than for a commodity of current consumption. For consumer goods, a greater number of product names will belong to one market than for goods for industrial purposes. The definition of the geographical boundaries of the market depends on the actual severity of competition among sellers in the national or world market, firstly, and on the height of the barriers to penetration of "external" sellers into the regional market, secondly.

One of the difficult questions is the question of the relationship between the market and the industry. An industry is a set of enterprises that produce similar products, using similar resources and similar technologies. The differences between the market and the industry are based on the fact that the market is united by the need to be satisfied, and the industry is united by the nature of the technologies used. Identification of the industry and the market, as a rule, is unacceptable - the goods sold by the enterprises of the industry can be more or less close substitutes, but they can also be completely independent goods. In turn, the market and the sub-sector identified within a particular industry on the basis of the production of close substitute goods can sometimes be considered as interchangeable concepts. Such a simplification is all the more acceptable, the more specialized the enterprises of the sub-sector. When we talk further about the industry (market), we will mean exactly the enterprises of the sub-sector, united by the release of replaceable products and at the same time competing with each other in the sale of these products.

J. Robinson proposed the following definition of the market, which is used with slight variations by the antimonopoly committees of many countries. The market includes a homogeneous product and its substitutes until a sharp break is found in the chain of commodity substitutes. The degree of substitution (substitution) is characterized by an indicator of cross-price elasticity of demand. As soon as the cross elasticity becomes less than a certain predetermined value, one can speak of a break in the chain of commodity substitutes, and hence of the market boundary. Asking various meanings cross elasticity, we can get different market scales.

In the countries of the European Economic Community, other criteria for identifying a market are also used.

1. The indicator of change in revenue when the price changes. For example, suppose the price of good A has risen. Consider how the revenue of manufacturers has changed this product. If revenue has increased (or, accordingly, the increase in sellers' profits is positive), the market is limited only to product A. If revenue has decreased (the increase in producers' profits is negative or at least non-positive), then, therefore, there is a close substitute, product B. Therefore, it is wrong to talk about the market product A, you need to look for product B and check the market for the product again according to the proposed method. Thus, the dynamics of revenues and profits of manufacturing firms with a sufficiently long rise in prices indicates the boundaries of the market. This criterion is based on the principle of direct price elasticity of demand. With a sufficiently aggregated definition of the market, the demand in such a market should be sufficiently inelastic. In this case, an increase in the price of sellers leads to an increase in their revenue.

2. Correlation of commodity prices over time. The positive correlation of price movements of goods over a long period of time (5-10 years) indicates that goods are sustainable substitutes, i.e. constitute one market. It is easy to see that this criterion, as well as the definition of the market used by J. Robinson, is based on the concept of cross-price elasticity. If goods A and B are close substitutes, an increase in the price of good A leads to an increase in the demand for good B and, other things being equal, to an increase in the price of good B.

3. Geographical limitation of the market. As a criterion for belonging of different territories to the same geographical market, the same conditions of competition are distinguished, such as the interconnectedness of demand, the lack of customs barriers, similar national (local) preferences, insignificant differences in prices, relatively small transport costs within the region, substitutability in the supply.

Having identified the boundaries of the market, we must determine the firms that produce goods in this market. How correctly the circle of enterprises operating in our market is defined can be checked using two indicators: the indicator of specialization and the indicator of coverage.

The indicator of specialization is the ratio of the volume of sales of a given product to the volume of sales of all goods by firms assigned by us to this industry. A similar indicator can be calculated for an individual enterprise.

The coverage indicator is the ratio of the volume of sales of a given product by enterprises assigned by us to this industry to the total sales of this product by all industries.

The study of the concentration of sellers in the market will lead to qualitative results in the event that the specialization indicator and the coverage indicator are large enough.

Determining the Size of an Enterprise

The problem is to answer the question: what can be considered the size of the enterprise? There are four main indicators that characterize the size of the firm in relation to the size of the market:

The share of the company's sales in the market sales volume;

The share of employees at the enterprise in the total number of people employed in the production of this product;

The share of the value of the firm's assets in the value of the assets of all firms operating in the market in question;

The share of value added at the enterprise in the sum of the value added of all manufacturers operating in the market.

The results of calculating the concentration indicators can significantly depend on the choice of a firm size measure. For example, if large firms use more capital-intensive technologies than smaller firms, then the level of concentration measured in terms of asset values will be greater than the level of concentration for the same industry, but measured in terms of sales or employment. The level of concentration, expressed in terms of value added, will be affected by vertical integration. If large firms are more integrated than medium and small firms, then using value added as an indicator of firm size will yield a higher level of concentration than sales. In addition, there is the problem of diversification: for firms operating in different sub-sectors and different markets, it is difficult to isolate employment, sales, or value added from that market.

Producer concentration and economies of scale

release of one type of product;

release of all products of one enterprise;

output of the company, consisting of several production units.

Each of these aspects requires special consideration. We will only note the general points. These include, first of all, the fact that large firms are able to reduce interruptions in the production process. This is expressed both in the reduction of equipment setup time per unit of manufactured product, and in the more rational organization of production activities, and in the growth of the experience of the company's employees.

However, the growth of the size of the enterprise is not unlimited. Learning curves tend to flatten as firms grow. The growth of remuneration for work is gradually suspended. The need for labor force leads to the expansion of the geography of its attraction. The rationality of resource processing when using traditional technology gradually reaches a certain stabilization. The speed of delivery of resources to the firm decreases and the delivery of finished products becomes more complicated. Yes, and managing a large unit is more difficult than a small one. Consequently, all types of expenses are growing. This means that economies of scale have their limits. Hence, there is a need for an optimal combination of the firm's growth rate and changes in production costs per unit of output. As foreign researchers note, the shape of the graph of the function of long-term average costs depending on the growth in production becomes as shown in Fig. 2

Fig. 2 A typical graph of the function of long-term average costs depending on the growth in production volume:

LRAC - long run average cost curve

Up to a certain minimum efficient level of output (in Fig. 2, this is segment OA), the economies of scale are significant, which manifests itself in a decrease in average costs as production volumes and output scale increase. With the help of organizational and technological transformations, it is possible to slightly increase the size of the company beyond the segment OA, however, at point B, the negative consequences of excessive growth in the scale of production occur and an increase in average costs will be observed.

The scale effect is schematically shown in Figure 3.

Concentration indicators and its assessment

The concentration index is measured as the sum of the market shares of the largest firms operating in the market:

where Yi is the market share of the i-th firm;

k is the number of firms for which this indicator is calculated.

The concentration index measures the sum of the shares of the k largest firms in an industry (with k , n is the number of firms in the industry). Market share is measured in relative shares (0

This feature of the concentration index is associated with a possible inaccuracy in its use.

The Herfindahl-Hirschman index is defined as the sum of the squared shares of all firms in the market:

Table 1. Dependence of the Herfindahl-Hirschman index on the market share of the dominant firm

The value of the Herfindahl-Hirschman index is directly related to the dispersion measure of firms' market shares, so that:

where n is the number of firms in the market;

s2 is the dispersion indicator of the firm's market shares, equal to ;

where Y is the average market share of the firm, equal to 1/n.

Below we will show the relationship of the index value with the Lerner indicator of monopoly power.

The entropy index shows the average value of the logarithm of the reciprocal of market share, weighted by the market shares of firms:

The entropy coefficient is the reciprocal of concentration: the higher its value, the lower the concentration of sellers in the market.

To measure the degree of inequality in the size of firms operating in the market, the spread indicator of the logarithms of the market shares of firms is used, the dispersion index:

where Yi is the firm's market share;

Y - the average share of the firm in the market, equal to 1/n;

n is the number of firms in the market.

The Gini index is a statistical indicator of the form

where Yi is the volume of production of the i-th firm;

Yj is the volume of production of the j-th firm;

n is the total number of firms.

The Gini index can be expressed as follows:

An ideal measure of seller concentration should meet the following requirements.

If the share of a large firm increases at the expense of a small firm, then the concentration indicator increases.

The entry of a new firm into the market lowers the level of concentration (provided that the size of the firm is below some significant level).

Mergers and acquisitions increase the degree of concentration.

The Herfindahl-Hirschman and entropy indices meet all the above conditions. Other indexes are partly consistent with these conditions.

Table 2 discusses scientific approaches to managing the concentration of production.

Table 2 - The main elements of scientific approaches to the management of the concentration of production

sign	Technological	Typological	Systemic
sign	Technological	Typological	System-Complex	System-Synergetic
Basis of classification	Production technology	Type of enterprises	Directions for increasing the volume of output	System elements
Object of study	Part of the enterprise, its operating subsystem	Enterprise as a whole
Relationship	They note the organizational connection of concentration with other forms of organization of production
The nature of the manifestation of forms	Specific forms of production concentration	Unified nature of concentration forms	Universal character, assuming a multivariate state	Universal character, taking into account the specificity of the functioning of organizations
Specificity of development	There are industry, market and product specifics	Missing	Manifested in the multivariate combination of forms	Polymorphic nature of the combination of forms, taking into account the specifics of relationships
Direction of development	From simple forms (aggregate) to more complex (factory)	The process is reflected in one of the final forms, which does not imply further development.	Assumes many states, with the possibility of transition into each other.	Assumes many states directed in a single direction of development
Dominant form of production concentration effect	Scale effect of production		Scale effect of production, integration effect	synergy effect, economies of scale
Effect of scale of production	It is achieved by eliminating "bottlenecks" in the technological chain.	Achieved through the integrated use of resources	Achieved through efficient organization of the production process	Based on the complementary effect of the resources involved.

Conclusion

Literature

1. L.V. Roy, V.P. Tretiak "Analysis of industrial markets", Textbook, M.: Infra-M, 2008. - 442 p.

2. Yu.V. Taranukha "Economics of branch markets", Uch. allowance, M .: Business and service, 2002. - 240s

3. Journal "Problems of theory and practice of management", 5/2004.

4. Magazine "Banking", 8/2007

The development of a system of indicators capable of assessing the state and development of competition in the Russian commodity markets has recently become more relevant due to the growing influence of the structure of markets both on the strategies of enterprises and on the decisions of public authorities. Concentration indicators characterize the degree of uneven distribution of production volumes or sales of goods between economic entities, as well as the possibility of each of them affecting the general conditions for the circulation of goods in the relevant market.

In foreign and domestic economic literature, research methods and technology for calculating the main indicators of concentration are presented in detail. Depending on the calculation method, economic content and direction of analysis, all concentration indicators can be presented in the form of two groups - absolute and relative indicators.

The absolute measurement of concentration involves estimating the number of enterprises in the market and the total share of a limited number of units. The proportionality of the market, which is primarily the ratio between its various elements, is characterized by relative concentration meters (Lorenz curve, Gini coefficient).

However, in statistical practice and the activities of antimonopoly authorities both in industrialized countries and in Russia, out of all the indicated meters, practical use is limited to only two of them (CR-3 and HHI). The most common and frequently used indicator for characterizing absolute concentration is the market concentration ratio (CR). It shows the cumulative shares of the sign of the concentration of the largest units and is defined as the sum of the market shares of the largest sellers in the market (can be measured in shares or percentages).

The market share of the seller is calculated as the ratio of not only the volume of sales, but also the number of employees, the value of assets or the value added of this firm to the total value of this indicator for the market as a whole.

This indicator is indispensable for statistical monitoring of the state of the market in most industrialized countries of the world, and in different countries the shares of a different number of enterprises are calculated. In the US and France, these shares are 4, 8, 20, 50, 100 largest companies. In the Federal Republic of Germany, England, Canada, for such calculations, data are usually taken from 3, 6, 10, etc. enterprises in the industry or data on firms operating in the market. In Russia, this indicator has been calculated and published in official statistics since 1992 for three (CR-3), four (CR-4), six (CR-6), eight (CR-8) largest sellers.

1. Concentration factor is defined as the sum of the market shares of the largest sellers in the market:

where CR i - concentration index of i firms, %;

q i - the share of sales of the i-th company in the sales volume of the market. %

n is the number of economic entities (firms) in the market. The concentration index can be measured in fractions or percentages.

This coefficient allows not only to compare the level of concentration of different industries or markets, but also to analyze the dynamics of concentration, to determine, due to the shares of which enterprises (large, medium or small) there has been a regrouping of forces in the market.

A significant drawback of the concentration indicator is its "insensitivity" to various options for the distribution of shares between competitors. For example. CR-4 will be the same and equal to 80% in two completely different cases - when one company controls 77% of the market, and the remaining 23 - 1% each. and when 4 equally powerful enterprises own 20% of the market each. Therefore, in recent years, statistical practice has begun to increasingly use other indicators that characterize the level of concentration as a whole for the considered set of enterprises.

2. The most popular generalizing indicator - Herfindahl-Hirschmann coefficient (HHI)- takes into account both the number of enterprises and the inequality of their position in the market and characterizes the level of monopolization. The value of the coefficient decreases with an increase in the number of enterprises and increases with an increase in inequality between enterprises for any number of them. When squaring market shares, the coefficient gives a higher weight to large firms than small firms. This means that if market share data for very small firms are not available, the resulting error will be small.

The Herfindahl-Hirschmann coefficient is calculated as the sum of the squares of the shares of all enterprises operating in the market, and can be measured in shares or percentages.

where HHI is the Herfindahl-Hirschman index;

q i - the share of sales of the i-th firm in the volume of market sales;

n is the number of economic entities (firms) in the market.

The lower the HHI, the lower the concentration, the stronger the competition in a given market, ceteris paribus, and the weaker the market power of individual enterprises. For a competitive market (if the number of enterprises in it exceeds 100), HHI tends to one, For a monopoly market - to 10,000 In accordance with different values of concentration coefficients and Herfindahl-Hirschman coefficients, three types of markets are distinguished according to the degree of concentration: highly, medium and low concentrated:

Indicators of market concentration make it possible to assess the degree of monopolization of the market, the uniformity of the distribution of sellers on it. The more sellers with equal volumes of supply on the market, the lower the corresponding indicators.

Along with positive characteristics, HHI has a significant drawback - its calculation requires a complete analytical base on all market entities, which is quite problematic in the context of a lack of information on the performance of market entities.

3. The main indicators of the market (monopoly) power of firms used in world practice are the Bain index, Lerner index and the Tobin index. Due to the complexity of their calculations, the Bain and Tobin indices are rarely used in the practice of antimonopoly authorities abroad.

At the same time, the Lerner index is quite accessible both in terms of its calculation and in terms of the economic interpretation of the results obtained and is defined as the difference between the price of a product and the marginal cost of its production, referred to the price:

where L is the Lerner index;

P - market price;

MC is the marginal cost of producing a good.

The advantage of this indicator is that it directly reflects the deviation of the price from the marginal costs associated with the inefficient allocation of resources in a monopoly. The more a firm's selling price deviates from competitive norms, the higher the Lerner coefficient. The Lerner index ranges from zero to one. For a perfectly competitive market, it takes on a value equal to zero (no market power); for the market of monopolistic competition is in the range of 0.3-0.5; for the oligopoly market - 0.6-0.8, depending on the number of firms (the fewer there are, the more likely the Lerner index values will be); for markets with a dominant firm, the index can reach 0.8-0.9, and for a monopoly market, it can approach one.