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

Suppose that, an enterprise “X” owns all retail foodstuffs stores in a city and has

storehouses which are not so large. For the sake of simplicity, let us assume that, foodstuffs store

sells only “diary” products requiring no special service (i.e. canned products, flour, sugar, rice

etc.). Prior to the delivery of foodstuffs to a retail network, storehouses are used for storing them.

The enterprise “X” purchases goods from companies and foodstuff importers based on contracts.

Analysis begins with determining limited markets supplied by funds of the enterprise “X” after

economic changes. Goods in limited markets may be either in storehouses, or retail sale channels. It

is very likely that foodstuffs customers will not go far away for seeking foods, because such trips to

remote destinations occur frequently. Therefore, the geographic area of markets where foodstuffs

sellers compete is not so large and can be measured across several kilometers. As the transport costs

of foodstuffs to a distance of several kilometers are not higher than own value of foodstuffs, a

geographical market for the warehouse is limited to a town or a part of a town.

The next step determines whether implementation of demonopolization is necessary. If a

market of capital investments (for instance, wholesale foodstuffs market and real estate market)

is critical, an effective competition among newly established companies is possible: in such

situations, an individually viewed retail-store will not incur undesired costs against the store

dominating in the market and lump sum capital investments will be relatively smaller. If an

access to a market with large-scale product based on time is possible, then demonopolization is

not necessary. But for the sake of example, let us imagine that, a decision on demonopolization

has been made.

The next part introduces horizontal and vertical sections in due consideration of mutual

relations among funds owned by enterprise “X”. Retail-stores are using storehouses for keeping

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