Page 16 - Azerbaijan State University of Economics

Adalat J. Muradov, Nazim Ö. Hajiyev: Analytical frameworks and procedures for application of
demonopolization

expenses are high, then those equipment should remain in that enterprise based on the decision of

agencies enforcing demonopolization.

4.a. Horizontal section

A decision on demonopolization of properties of funds in a horizontal relationship

supplying the same limited market with goods is of primary importance as the structure of

properties of these funds reduces competitive activity of private enterprises in a given market.

The first step of demonopolization capable of reducing the competition generated by a number of

independent supplier- companies is to divide funds into two enterprises.

There is no method of determining the number of independent supplier-companies

necessary for effective competition in the limited market. Usually, it is considered that, the

higher the number of such companies, the better it is, however, this division accompanying the

production lasts until increasing general production expenses in the market. Sufficiently great

social efficiency from competition is obtained in the result of substitution of non-regulated

monopoly with two rivals (if rivals do not conclude a collusive or open treaty with each other).

But a bipolar structure becomes subject to a collusive treaty more frequently than other

oligarchic markets. Thus, one can think that, the minimum number of companies with relatively

higher advantages of competition should be three. Note that, when analyzing the influence of the

number of market participants on competition, a number of other more detailed market indicators

may be a more penetrating factor affecting expected tension of competition in a specific market.

In this manner, each market may be demonopolized through horizontal fragmentation of

funds of an enterprise into three independent enterprises among three equipotential supplier-

companies.

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