Page 12 - Azerbaijan State University of Economics

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

import barriers are seen as temporary). Where the negative effect of the monopoly is not high

and imports barriers are in fact are for short-term, demonopolization may be inexpedient. But

privatization without demonopolization will cause formation of a new strong group that are keen

on making obstacles for free trade and having common interests.

When import barriers and transport expenses are less, foreign suppliers may compete with

local enterprises. If this competition is strong in relation to local producers or goods,

demonopolization of assets of local enterprises providing the market with goods, will not

enhance this competition. Where the import barrier are less, the following products may offer

good sale, for instance: various grades of steel, trucks and passenger cars, high power and

distribution units, some chemicals and a number of other finished products or agricultural

produces [Neven D. 2007]. If the products offered are difficult to sell or there are other barriers

to a free import, demonopolization is not encouraged. This is because enterprises selling these

products are very likely to fail competition with foreign producers. For instance, retail trade and

many professional services usually are not study subjects of the international trade; therefore,

companies rendering services to them should not be removed from demonopolization for

effectiveness of international competition.

3.b. Markets and free entry

Demonopolization in markets with relatively free entry may intensify the competition to a

great extent. Competition exercised in such markets by the existing companies or candidates

(companies) may align producers in dual form thereby squeezing anti-competitive start:

enterprises may occupy the market even through weakening the leadership of former

monopolists; or enterprises may display a real danger of appearing in the market during

12