A. L. Karpov
halk.albert@gmail.com
Dostoevsky Omsk State University, Omsk, Russian Federation
Abstract:
In economic science, the role of economic institutions in ensuring the functioning of a market economy is widely discussed. Neoclassical theory focuses on the price mechanism and competition, denying the need for direct government intervention, while institutional theory emphasizes the importance of the institutional environment. Analyzing various approaches, we can define the market as a complex institutional structure formed to organize effective interaction between economic entities. Key formal first-order institutions supporting a competitive market include property rights, freedom of enterprise, civil and antitrust law, and contractual relations. Oversight of these rules is assigned to law enforcement agencies, which facilitate the enforcement mechanism. However, for the effective market operation as an institutional structure, it is necessary to have a second important mechanism – a mechanism for implementing the functions of the institution. Competition serves as a mechanism for implementing market functions. At the same time, supporting an uncontrolled competitive pricing mechanism at any cost and in any industry is not necessarily the best solution. In cases where the conditions for free market functioning are violated, within the institutional structure of the market there is a need to introduce additional rules – specifically, second-order institutions and a mechanism of controlled competition.
Keywords:
market mechanism, formal institutions, informal institutions.
Paper submitted: September 5, 2025.
For citation:
Karpov A. L. (2026) Competition and institutional environment: foundations for efficient market operation. Russian Journal of Social Sciences and Humanities, vol. 20, no. 1, pp. 202–212. DOI: 10.57015/issn1998-5320.2026.20.1.18.
