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The Role of Vertically Integrated Structures in Industry Markets

The electric power industry is a basic sector of Russia's economy that creates necessary conditions for the activity of productive forces and life of the population. The results of electric power industry reorganization in our country are rather ambiguous. The structural changes were carried without taking the vertical integration principles in consideration, which had a significant impact on the pricing policy and investment programs. 
The results of studying the current state of the sector in the Russian Federation are presented, and recommendations on solving the existing problems based on the vertical integration principles are given. It is pointed out that vertically integrated companies that manage generation, distribution, transmission, and sales do not come in contradiction with the market conditions and, what is more, guarantee the power supply reliability. The relevance of this problem is stemming from the fact that the prices for electricity have a significant influence on the country economy as a whole. Under the currently existing conditions of the rapidly changing world policy, it is especially important to use vertical integration for gaining the maximum efficiency. Thus, these principles are the basis for creating an optimal market structure.