The threat of monopoly

In the late 19th century, the corporation was viewed by many as the chief instrument of monopoly. It was commonly argued that, by raising vast amounts of capital, corporations could combine or collude with competitors to control prices and inhibit genuine competition.

A monopoly exists in theory when one firm controls production and sale of total output of a commodity. In prac­tice, however, a definition based on control of a specified percentage (often 33 percent) of total sales is often used.

In both theory and practice, large companies can become monopolies by absorbing smaller ones through stock purchases on the open market. The giants then raise prices, causing people who need their products to pay a larger amount than before.

Although in a perfect market competition is unrestricted and sellers are numerous, free competition and large number of sellers are not always available in the real world. In some markets there may only be one seller or a very limited number of sellers. Such a situation is called a “monopoly”, and may arise from a variety of different causes. It is possible to distinguish in practice four kinds of monopoly.

State planning and central control of the economy often mean that a state government has the monopoly of important goods and services. Some countries have state monopolies in basic commodities like steel and transport, while other countries have monopolies in such comparatively unimportant commodities as matches. Most national authorities monopolize the postal services within their borders.

A different kind of monopoly arises when a country, through geographical and geological circumstances, has control over major natural resources or important services, as for example with Canadian nickel and the Egyptian ownership of the Suez Canal. Such monopolies can be called natural monopolies.

They are different from legal monopolies, where the law of a country permits certain producers, authors and inventors a full monopoly over the sale of their own products.

These three types of monopolies are distinct from the sole trading opportunities which take place because certain companies have obtained complete control over particular commodities. This action is often called ‘cornering the market’ and is illegal in many countries. In the USA anti-trust laws operate to restrict such activities, while in Britain the Monopolies Commission examines all special arrangements and mergers which might lead to undesirable monopolies.

Vocabulary

A

1. sole proprietor – частный предприниматель

2. to be responsible for – отвечать за, быть ответственным

3. failure – провал, крах

4. a loss – убыток

5. assets – активы, собственность, которая может быть обращена в наличность

6. an advantage – преимущество

7. a disadvantage – недостаток

8. to gain experience – приобрести опыт

9. a partnership – товарищество

10. to enter into an agreement – заключить соглашение, контракт

11. to be qualified in smth/doing smth – быть квалифицированным в чем-либо

12. to be exempt from – освобождаться от чего-либо

13. a favorable tax position – льготное налогообложение

14. to be liable for – быть в ответе за что-либо

15. a debt - долг

16. to squander money – растратить, промотать деньги

17. efficiency – эффективность

18. a transaction - сделка

19. in exchange for a percentage of the profits – в обмен на процент от прибыли

20. costs – издержки

21. volume – объем

B

1. overhead costs per unit – накладные расходы на единицу товара

2. a brand name – торговая марка

3. to research – проводить исследование

4. innovation – нововведение

5. to be critical to maintaining competitiveness and productivity – важный, решающий для поддержания конкурентоспособности и продуктивности

6. to conduct business – заниматься бизнесом

7. distinct (from smb/smth) – отличный (от чего-либо/кого-либо)

8. property – собственность

9. to sue in court – преследовать в суде

10. flexible – гибкий

11. legal standing – правовое положение

12. to relieve smb of individual responsibility – освобождать кого-либо от персональной ответственности

13. to go bankrupt – обанкротиться

14. stock – акции

15. a legal entity – юридическое лицо

16. a tax deductible business expense – расходы на ведение бизнеса, подлежащие льготному налогообложению

17. a retirement fund – пенсионный фонд

18. a fraction of the total – часть целого

19. board of directors – совет директоров, правление

20. to supervise –наблюдать, контролировать, курировать

21. chairman – председатель

С

1. to raise capital – добывать деньги

2. a loan – заём

3. to be due – подлежать к осуществлению

4. to reach maturity – достигать срока погашения облигаций

5. to pay back the principal at its face value – выплатить первоначальный вклад по номинальной стоимости

6. equity – акционерный капитал (обыкновенные акции)

7. affair - дело

8. sufficient - достаточный

9. the basic value – начальная стоимость

10. lending institutions – кредитные организации

11. an insurance company – страховая компания

12. savings-and-loan establishments - сбербанк

13. to be content to do smth – соглашаться на что-либо

14. to accept smth – принимать, допускать

15. capital gain – прирост капитала

16. a threat - угроза

17. to collude with – сговориться, войти в сговор

18. to inhibit genuine competition – препятствовать подлинной конкуренции

19. percentage of total sales – процент от общей суммы продаж

20. to cause smb to do smth – причинять, заставлять, послужить причиной

21. unrestricted - неограниченный

22. numerous - многочисленный

23. to distinguish – выделять, различать, отличать

24. authorities - власти

25. geographical circumstances – географическое положение

26. to obtain smth – приобретать, достигать

27. anti-trust laws – антимонопольное законодательство

28. a merger – слияние