Introduction
One of the numerous benefits of market research is the knowledge it provides about your target audience, your rivals, and the industry. The supply and demand for a product or service might also be studied in more detail. This will put upper management in a stronger position to make marketing strategy choices. Using fake data is not acceptable in market research. However, small businesses would rather conduct their studies than depend on those conducted by larger corporations. When a corporation has to conduct its own study, it often contracts with a market research firm. To gather information for market studies, several techniques might be employed. Therefore, it is possible to do both primary and secondary research simultaneously.
Azerbaijan Monopoly
In economics, a monopoly is a market structure, among several others. Monopolies arise when one person or organization controls the entire market for a product or service. Monopolies are different from other businesses since there is no rivalry in the market for the product or service created by the monopoly (Aliyeva, 2018).
After discontinuing its imports of Russian gas in 2018, Georgia began importing industrial gas from Azerbaijan’s state-owned monopoly. Consequently, Azerbaijan acted as a monopoly supplier of natural gas to Georgia, supplying the country with 99 percent of its needs. Georgia has only granted licenses to two firms for natural gas extraction: Shah Deniz and SOCAR. After months of political bickering and secret negotiations, Georgia and Russia finally reached a new energy agreement. Georgia has depended on Azerbaijan for its energy needs for a long time because of the two countries’ tight political and economic ties (Gulaliyev, 2020). As a result, Azerbaijan will inevitably become a monopoly. However, economists warn that, due to its scarcity, relying on imports of natural gas from other countries is not a sound economic or political strategy.
This monopolistic situation has been beneficial for both Georgia and Azerbaijan. Over time, Georgia shifted course due to new energy agreements. Because of this, Georgia may now put more emphasis on green energy. Georgia gained energy independence and security for millennia, and conventional hydrocarbons became outdated. Energy connections between the two countries have strengthened greatly since the Baku-Tbilisi-Ceyhan (BTC) oil pipeline started transporting Azerbaijani oil from the Caspian Sea to the Mediterranean Sea. Although energy trading had not yet been established, the Baku-Supsa oil pipeline began running in 1999. Despite having a common opponent in Russia, Georgia’s geopolitical clout and Azerbaijan’s careful diplomacy seem to have delivered positive outcomes (Huseynov, 2021).
Oligopoly in Azerbaijan
Oligopolistic markets are dominated by a relatively small number of dominant enterprises. These firms control the bulk of the market share. These companies are conscious of their dependence on one another, so they work together to set pricing and determine production levels. The number of businesses operating in this industry is rather low, meaning each one controls a good market share (Øverby & Audestad, 2021). Oligopoly is distinct from monopolistic competition and monopoly because companies operating within an oligopoly have some power over pricing, while businesses operating inside a monopoly and monopolistic competition have no influence whatsoever over pricing. This is the most important aspect that differentiates the three various market models. Within the realm of academic research on oligopolies, one of the most often discussed topics is the influence of interdependence between businesses on pricing and production decisions.
After Kazakhstan’s Financial Industrial Groups (FIGs) attained significant political weight in 2009, the term “oligarch,” along with “grouping” and “monopolization,” started to appear more often in the country’s local media in 2010. They intervened to heal the rift that had developed between previously formed organizations fractured due to tensions between the core and the periphery and rivalry among the clans. The bankers who governed the nation were the most powerful and affluent FIGs. They ran the country. The FIAT foreign exchange rates in Azerbaijan are another thing that the country’s banks must monitor.
In contrast to the FIGs in Russia and Kazakhstan, which concentrated on non-resource related subjects, the president of Azerbaijan has extensive influence over the oil and gas industries through state-owned businesses. This is the case in the country of Azerbaijan. Azerbaijani state-owned oil companies (FIGs) have been surprisingly successful in areas other than oil (Mustafayev et al., 2022).
In Azerbaijan, the rise of oligopoly may be traced back to the middle of the new century. GILAN C’s economic activity has substantially increased since the country gained independence. New market links have been developed, and entrepreneurial norms have been implemented. As a result, GILAN C has become the market leader in its nation. After extensive deliberation, GILAN has concluded that it will support Azerbaijan’s efforts to develop the area’s economy. According to estimates provided by local news sources, the oligopoly stage often begins somewhere between years five and six. The state of Azerbaijan regulates or otherwise protects some FIGs, which contributes to the distinctiveness of these institutions. ZQAN Holding is an influential organization since it is the third largest oligarchy in the country. This name is in honor of the minister’s ancestors, who were interested in the transportation industry (Vidadili et al., 2017). A significant contributor to the group’s amicable relationships is the close links that the ministers have established with the FIGs.
Competition in Azerbaijan
Oil and gas play a significant role in Azerbaijan’s economy since they account for the country’s primary exports and source of tax revenue. It is unclear whether or not this economic model will continue to be successful even though these resources are still abundant and have significantly improved the quality of life in the nation since the late 1990s. Since oil output is declining and major oil and gas importing nations have pledged to reduce greenhouse gas emissions to zero by the middle of the century, without carbon capture and storage, there may not be much of a market for oil or gas in 30 years.
There is fierce rivalry in Azerbaijan, where the need for electricity is likely to rise in the future years and decades. Access to electricity is universal and affordable; further electrification is anticipated to significantly boost annual consumption from its present low of 2,500 kWh per person. Investment in new power plants and other energy infrastructure is essential if the nation develops a more robust electrical sector (Shaymardanova, 2013). The proposal to transform the nation’s electrical sector from a centrally planned, vertically integrated system to one that is more decentralized, competitive, and environmentally friendly has been praised by the International Energy Agency (IEA). Making sure it arrives quickly is the tough part.
Conclusion
In this paper, I have talked about the market study I conducted concerning the monopolistic and oligopolistic competition in Azerbaijan. I carried out this research in order to have a better understanding of the market. Azerbaijan is one of the countries that contribute to the extraction of oil and natural gas on a commercial scale. The firm has been able to keep its status as a monopoly throughout its existence because it is the only country that ships natural gas to Georgia from outside. Other monopolistic enterprises and industries in Azerbaijan have been impeded by legislation that has been implemented by the government of Azerbaijan and the federal government.
On the other hand, oligopoly has been encouraged all over the place in the country’s economic structure. This is true across the board. Consequently, the oil and gas industry in Azerbaijan has progressed to the sector’s last stage of development.
References
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Øverby, H., & Audestad, J. A. (2021). Digital Monopolies and Oligopolies. In Introduction to Digital Economics (pp. 193-206). Springer, Cham. https://www.springerprofessional.de/en/digital-monopolies-and-oligopolies/19566400
Shaymardanova, Z. (2013). Exploring the Authoritarian Regime of Uzbekistan Through Its Cotton Sector (Doctoral dissertation). https://www.opensocietyfoundations.org/uploads/ddbf43f7-1528-4b79-a61d-94ee36f808c9/uzbekistans-cotton-sector-20141021.pdf
Vidadili, N., Suleymanov, E., Bulut, C., & Mahmudlu, C. (2017). Transition to renewable energy and sustainable energy development in Azerbaijan. Renewable and Sustainable Energy Reviews, 80, 1153-1161. https://ideas.repec.org/a/eee/rensus/v80y2017icp1153-1161.html
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