Article title On the Issue of Profitability of Monopolies
Authors

Candidate of Juridical Sciences, Senior Research Fellow Department of Legal Support of the Market Economy Academician F.H. Burchak Scientific Research Institute of Private Law and Entrepreneurship of the National Academy of Legal Sciences of Ukraine (Kyiv, Ukraine) ochernenko79@gmail. com

 

Name of magazine Legal journal «Law of Ukraine» (Ukrainian version)
Issue 11/2021
Сторінки [93-102]
Annotation

Profit is the goal of any business entity, as it allows it to operate, develop and provide quality services to consumers. Currently, there is a tendency to reduce the financial performance of monopolies.

The purpose of the article is to analyze the impact of external and internal factors on the profitability of monopolies and identify ways to improve their financial performance.

Monopolies operate in various fields - energy, oil and gas, metallurgy, transport and more. There are constant discussions in the scientific literature about the positive and negative impact of monopolies on the country’s economy. The positive features of a monopoly, as a rule, include the ability to withstand market fluctuations and resistance to losses. But today in Ukraine, natural monopolies belonging to the public sector of the economy are mostly unprofitable, as evidenced by their financial statements for 2019– 2021.

The main reasons for the loss of monopolists in recent years are not only the coronavirus pandemic, but also the poor quality of services, depreciation of fixed assets, inadequate corporate governance, corruption, political influence on the supervisory boards of stateowned companies.

The expediency of creating a supervisory board as a supervisory body designed to protect the interests of company owners is recognized in many countries around the world. However, the involvement of independent members in the supervisory boards of state monopolies in Ukraine, unfortunately, did not help to improve their financial performance.

Therefore, a number of scientists argue that the concept of natural monopolies is a relic of the past and an obstacle to economic development. Among the arguments in favor of reforming natural monopolies is the view that the state cannot be an effective manager in regulating natural monopolies, especially when businesses in a monopoly position in the market are state-owned. At the same time, we can confidently say about the profitability of private monopolies. The pharmaceutical and information technology sectors have proved resilient to the financial crisis caused by the coronavirus pandemic.

The author concludes that the factors that affect the profitability of the entity are usually divided into external and internal. And if external (pandemics, instability of legislation, etc.) do not depend on the business entity, then internal (management efficiency, innovation, etc.) depend on the monopoly itself.

 

Keywords monopolies; natural monopolies; state monopolies; profit; competition
References

Bibliography

 

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