On the external economics of coal mining heterarchies

Abstract

In recent years, the economic crisis has engulfed underground coal mining, which is caused both by the high level of costs characteristic and by the unfavorable situation in the coal markets in the form of established low prices for coal products. Bankruptcy has befallen even world-class companies. At the same time, in the 1990s, Ukrainian practice was enriched by the experience of corporate development of a mine field, related to the interaction within a single mine of a private firm that develops its own part of mine field with own equipment, and a state-owned enterprise that provides the company with paid transportation and winding cargo services, ventilation, drainage and energy supply till to sanitary services of personnel. As a result the traditional hierarchical order of management, when one firm owns the mine and services it, has changed to a heterarchical one. Despite the fact that the practice of corporate development of the mine field received a certain scientific generalization, the externalities, inherent in the appearance of the hierarchies, were ignored. Positive externalities in microeconomics are described in the form of Malinvaud's example, on the basis of which a study was later carried out to investigate the possibility of increasing the efficiency of two government agencies interacting in a single project (the theory of gift exchange as the embodiment of the externalities market).The aim of the paper is to translate the scheme of the example of Malinvaud to the practice of interaction between two firms, involved in coal mining in one mine. Subject of research is to define optimal conditions for the functioning of two firms, which activity generate the effect of externalities.The results and conclusions of the paper are: the use of heterarchies in the mining industry makes it possible to achieve equilibrium and Pareto optimality, contributing to an increase in the economic efficiency of enterprises, operating in conditions of increased unprofitable risks.