IMPORTANCE OF PRICE CONTROL OF NATURAL MONOPOLY FOR CONSUMERS

Abstract

By utilizing its power, State aims to restrict
monopolistic processes and encourage competition,
or to affect market structure or behavior
of economic entities. Activity in the field of antimonopoly
legislation that state implements has
an old date, and is implemented, with resistance
of certain subject, with varying success. The focus
of our attention is the specifics of policies to
control prices of natural monopolies, or its fraction,
that are in the interest of the state and local
communities. This activity is also present in
most developed market economies, but they still
have very actual aspect of creating general conditions
for the development of competition and
control of natural monopolies. At the level of a
local community, prices have been formed at a
level that is adjusted to the purchasing power
of population, and to sustainable development
of enterprises. This paper will present and the
analysis of price forming in a free market, and
in a case of monopoly, and it will be pointed to
harmful effects of monopoly which express itself
by reducing production and increasing prices.
This imposes the necessity of state intervention,
which aims to protect consumers.