A new approach to the methodology for determining oligopolized industries in the economic structure

Oligopolies as an important element of imperfect competition have been considered repeatedly. One of the most prominent representatives of this topic was J. Schumpeter, who noted the positive aspects of the activities of these economic entities. However, modern economic systems of countries minimize competitive gaps between firms, aiming to reduce the trend of oligopolization.

Thus, individual business entities are divided, creating new branches and other organizations that formally compete in certain activities. This tactic can be traced in the company Anheuser-Busch InBev, which under different brands acts as an oligopolist in the beer market [1].

Formally, such organizations advocate competition by providing their products under various brands and names. However, they remain oligopolists of the market and have an impact on the entire economic system of the world.

In order to make a real assessment of the oligopolization of the economy, it is necessary to create a new methodology that will be able to determine imperfect competition in the sector of the economy. Oligopolized industries are present in all market economic systems.

As noted by Vasilieva T.V. and Grigorieva M.V., oligopoly is the existence of several large firms on the market, whose products can be both heterogeneous and homogeneous; the entry of new firms into the industry, as a rule, is difficult; the feature of oligopoly is the mutual dependence of firms in making decisions about prices for their products [2].

This definition allows us to give in detail the theoretical understanding of the term "Oligopoly". Currently, methods for determining the oligopoly price based on the Cournot model have been developed. They are used by most public and private bodies when calculating business statistics. This approach is followed by Mizel A.A. and Kozlov S.V. However, their calculation does not allow you to determine the industry and sector indicators without information about each specific business entity.

The approach proposed in this paper is based on the definition of oligopoly models based on the identification of the dominance of several major market players without considering the indicators of each firm. This method will allow to identify the sectors of the economy that do not provide a complete documentary records. In particular, they include the banking sector, which, according to the law, has the right not to specify full data on total turnover and revenue [3].

The criteria for classifying enterprises as large businesses vary from state to state. According to the current legislation of the Russian Federation, the category of large business actually includes enterprises and organizations with more than 250 employees or turnover of more than 2 billion rubles per year.

Small business (including microentrepreneurship) are organizations that do not exceed 100 people in size and do not exceed 800 million rubles in annual turnover. The average number of enterprises is from 101 to 250 people or with a turnover of 800 million to 2 billion rubles.

In the US and EU countries, the criteria for classifying a large business are somewhat different. In the United States, the criteria for business forms are specific and vary across industries. Small businesses include organizations with up to 50 employees or with a turnover of up to 0.68 million euros. On average the number of 50 to 1550 people, or a volume of 0.68 to 495 million euros. Large companies include more than 1550 employees or with an annual turnover of 495 million euros.

In EU countries, to classify an enterprise as a large business, it is enough to track enterprises with more than 250 employees or turnover of more than 50 million euros. On average organizations are the enterprises with the number of employees from 50 to 250 people, whose turnover is from 10 to 50 million euros. Small-firms are the businesses with up to 50 employees and with turnover less than 10 million.

Accordingly, a large enterprise can have a turnover of several SMEs and at the same time it is able to employ a significantly larger number of employees. Thus, the sectors of the economy dominated by small and mediumsized businesses are obviously less oligopolized than the industries dominated by large. This is explained by the higher competition that occurs when the total turnover is distributed among many small market partici- pants than the differentiation between a small number of large economic entities [4].

In view of this, the volume of large-scale business in the industry was chosen as a criterion for classifying a certain area of economic activity as an oligopoly. Large and structurally significant business associations that prevail in a particular sector of the economy can potentially have a negative impact on the competition of the industry, since it has an advantage over small forms of entrepreneurship.

In this case, we are speaking about a new, expanded understanding of the type of oligopoly, when a certain economic activity is dominated not by a few enterprises, but by a large group of them. At the same time, it will be difficult to include new enterprises in the market relations in advance, since large forms of business have a striking advantage over small ones. They are able to develop specialized scientific activities, expand production and occupy a stable position in the market. Therefore, the oligopolic type of competition is acceptable to include the type of economic production that dominates the market over small forms.

In order to test the competence of this view, the share of turnover of large businesses in a number of sectors of the Russian economic system was analyzed. Since the share of small and medium-sized businesses in Russia is almost 2.5 times less than that of the United States and the EU, it is appropriate for them to identify historically oligopolized industries related to heavy engineering, oil refining, beer production, and some others [5]. A table with data is presented.

Table. Indicators of activity of large business entities by oligopolized types of economic activity. Data billion rubles in current prices; the percentage of turnover from the total volume of economic activity

Source: Federal state statistics service of the Russian Federation [6]

The presented data confirm the high concentration of production focused in large businesses. A detailed analysis of these industries confirms their oligopolization. This is also noted by the estimates of E.G. Kazantseva, who conducts a structural analysis of this topic [7]. Moreover, mining, according to E.G. Kazantseva, is more oligopolized than mechanical engineering. This confirms the correctness of the assessment of competition in industries.

Accordingly, that the share of large businesses in the industry is actually directly proportional to the level of oligopolization. The authors believe that imperfect competition should be determined by the presence of a high share of large businesses in any activity.

This is due to the structural influence of oligopoly associations on the entire economic sector. In this case, it is appropriate to assume that even a small prevalence of big business can limit the types of competition and form oligopoly models.

This criterion makes it possible to attribute a much larger number of industries to activities with imperfect competition than at present. In view of this, the authors consider it necessary to revise the term "oligopoly" in order to adjust its meaning. At the same time, the main focus should not be on the share of a particular economic entity, but on the entire large business, which is the main platform for oligopolization of the economy.