The Impact of Monopolies on Small Business Development in Russia

The imposition of economic sanctions on Russia by other countries has raised interest rates, diminished the working capital of small and medium-sized enterprises (SMEs), and led to the restoration of state-owned companies in many sectors of the economy. Nevertheless, the Russian Federation continues to make efforts to develop a market-oriented economy based on open competition. This article considers the current situation with SMEs in Russia from the standpoint of market competition and the influence of monopolies on this process. It analyzes bottlenecks in the interaction of monopolies with SMEs. For example, the wires and pipelines required to distribute energy, heat, and electricity over large geographic areas are natural monopolies: only one company can provides each service efficiently in a given area. The companies that control those natural monopolies are able to extract payments far in excess of cost from small businesses. In this and other ways, monopolies are able to dominate the Russian economy and restrict competition from SMEs.