World Financial Crisis 2008 is the serious reason to

A DEVELOPMENT OF ENTREPRENEURIAL AND COMPETITIVE ENVIRONMENT ON REGIONAL MARKETS OF RESIDENCE CONSTRUCTION MARKET UNDER CONTEMPORARY GLOBAL CHALLENGES Y. K. Persky, Y.V. Kataeva The article discusses a problem of creating of competitive environment in the regional residual construction market. The main attention is paid on analysis and modeling interactions of market participants from a position of hierarchical approach. There are developed a matrix models, which are reflecting interlevel interactions of a market subjects which have a great potential of competitive development and increasing of effectiveness of entrepreneurship World Financial Crisis 2008 is the serious reason to think again how justified, strategically and tactically reconciled decisions, which were made by economic actors at different levels those who manage socio-economic processes. In the early 90's of 20th century world society developed The Concept of Sustainable Development, the origins and content of which goes back to the problem of planetary ecological changes. Moreover, annalist and experts who have been researching the dynamic of resource consumption in world economy have come to the conclusion that the changes mentioned above should be prevented urgently. The results of their findings were more than disappointing – volume and level of consumption of recourses in various fields of human activities, especially in industrial production, far exceed a reasonable level of sufficiency. Market consumer is ready to devour our planet. That can be applied both to food, natural or other resources. Nearly 20 years after an adoption of the Concept speed and volume of consumption of resources have been increasing significantly due to various reasons, especially in countries with developing and boosting economy. Therefore it is no wonder, that we can clearly observe a phenomenon of progressive credit pyramids, especially in developed countries. Today's banking and financial crisis is the best evidence of that. Residence construction market is the most vulnerable segment of an economy to financial shocks due to the nature of housing as a durable good, demand on which reduces more significantly during the recession. In these circumstances a state, following the generally known conception of J. M. Keynes, should take certain measures to stimulate aggregate demand (such as devaluation of national currency, reducing tax rates, increase government transfers, creation of new jobs, funding programs for retraining, introducing public works, etc.), implementation of which ensures gradual recovering for an economy. Obviously the listed above measures are followed up by increase in income and standard of living stimulates a demand for houses. However for a recovering a residence construction segment after a crisis the increase in demand alone is required but it is not enough. An emphasis should be made on stimulation of a supply of dwelling and creation stimulus for a competition, as long as stimulation of demand alone (for instance through mortgages) leads to an exceeding of a demand under supply and increase in prices. A regulation of competition in a regional residence construction market which is based only on federal as well as regional anti-trust legislation is obviously not enough. That is why a system of regulation of entrepreneurial and competitive environment using a strategy of effective rivaling of subjects of a resident construction market should be worked out while facing contemporary global challenges. A strategy should be based on revealing and evaluation of a system of links between subjects of different levels of a residence construction market as well as on the creation of multi-factorial models, which takes into consideration a real influence of macroeconomic regulators on strategically interactions of subjects of the market. That strategy can be used for creation scientifically approved programs of a residence construction. The position of the strategy in the system of management of residence construction segment is shown on the pic.1. Definition of strategic goal of residence construction segment’s development Definition of target indicators of residence construction segment’s development Increase of regional housing rate Indicator of new-built houses (sq. m) per head in region (Р1) Amount of residential space (sq. m) per head in region (Р2) Rate of availability of housing (Р3) Level of residence construction segment’s development Evaluation of level of residence construction segment’s development, on the base of complex index Average price of 1 sq. m. of new housing (Р4) Setting of optimal target indicators’ values Р*1 Р*2 Р*3 Р*4 Estimation of public losses’ value (L) Estimation of target indicators’ deviations from the optimal values as a result of the done strategy Estimation of the public cost function, which is emerging when the target indicators are not optimal accordingly to the public-losses целевых function L = ε1(Р1 - Р1*)2 + ε2(Р2 - Р2*)2 + …+ ε4(Р4 - Р4*)2 Revealing of the factors of residence construction segment’s development Exogenous factors of development Endogenous factors of development Estimation of a complex of regulatory instruments which can be used for the achievement of optimum of target indicators The regulatory instruments vector: I = (I1, I2 … , In ) Creation of a complex of models of a residence construction segment functioning, which link target indicators and instruments of their achievement The system of evaluative coefficients, which show the correlation between indicators and instruments, on the base of matrix models : Р1 = α1I1 + α2I2 + … + αnIn … Р4 = δ1I1 + δ2 I2… + δ nIn Realization of residence construction segment’s development strategy L →min Choice of residence construction segment’s development strategy Выбор стратегии развития Model (strategy) of сектора effective interactions of жилищного subjects on regional строительства residence construction market Managing of the certain factors of residence construction segment’s development Creation of a complex of alternative strategies of residence construction segment’s development The creation of the mechanism of realization of a competition regulation’s strategy at the residence construction market Pic.1. The system of regulation of development of an residence construction segment in a region A hierarchical approach is used for the creation of competitive environment. In a framework of the mentioned hierarchal approach process which can be fined on different levels of hierarchy and influenced by subjects of other levels can be researched in complex. The approach takes into consideration all elements of a residence construction market hierarchy, as well as their position in hierarchy and all kinds of links on the residence construction market. A matrix method was used for the research of influence of different levels of hierarchy on each other. Matrix model includes all kinds of links between levels one can find in a residence construction market. The general scheme of hierarchal vertical and horizontal links on a residence construction market is shown on pic.2. Meso-level objects 1 Aggregated indicators of meso-level Gross regional product Total value of residence construction Regional and municipal government Natural monopolies Average housing rate in a region Average price of 1 sq. m. of new-built houses 3 4 2 7 Share of residence construction segment’s production in GRP Price index for construction materials and rig work Share of employed in residence construction industry in total number of employed Rate of availability of housing Total value of the engineering infrastructure objects built by developers Total value of settled irreparable dwelling 6 Micro level objects Developers Investors Consumers Constructors Shareinvestors Others Microeconomic indicators Volume of residence construction by i-developer Total costs of a residence construction of 1 sq. m. built by ideveloper Costs of demolishing in a case of pulling down of irreparable dwelling for i-developer 5 Share of the cost of engineering infrastructure objects in a total construction costs for i-developer The average prices of 1 sq. m. built by i-developer The average duration of a building cycle of i-developer Pic. 2. The scheme of hierarchal links on a residence construction market As one can see on the pic. 2 regional governments should be viewed as mesolevel objects, as they create directions of residence construction segment development and regional housing policy (link number 1) using following elements:  goals, which are formed on the basis of a set of mesoindicators: increase in volume of residence construction, increase of housing rate, increase of a share of residence construction segment’s production in GRP, increase in the availability of housing, of quality of dwelling, increase the rate of renewing dwellings;  mesoeconomic instruments of regulation: budget expenditures on building of social housing, regional and municipal warranties and subsidies for the building of engineering infrastructure under building plants, real estate tax, land tax, tariffs for connection to engineering infrastructure, total number of building plants available for development;  information about regional tendencies in the field of residence construction. Mesoenvironment for elements of microlevel is formed taking into consideration decisions made by regional government and natural monopolies (link number 2). Moreover we can include the influence of mesoeconomic indicators to the mesoenvironment (link number 4). Microenvironment for microelements is formed using contacts between them as a strategic rivals (link number 5). Activity of microlevel objects is reflected in microeconomic indicators (link number 6). Mesoindicators are formed by aggregation of microindicators which show a condition of a residence construction segment in a region and are determined by interactions between developers (peculiarities of their competition) (link number 7). Matrix model for every type of links were formed to creation the integral model of a residence construction market as a hierarchical system: 1. Matrix of direct descending relations, which show influence of current state of regional residence construction segment and exogenous factors on regional regulatory policy (policy is used to affect on microsubjects) (tabl. 1): Tabl.1 Matrix of influence of mesoeconomic aggregates and exogenous factors on mesoagents’ functionality Mesoeconomic regulators Z1 Z2 … Zn Mesoeconomic aggregates and exogenous factors laying under decisions on regulation of residence construction market Total number (sq. m.) of new-built houses in a region (R1) The average price of 1 sq. m. of new-built houses on a primary market (R2) Share of residence construction segment’s production in GRP (R3) Index of housing in a region (sq. m per head) (R4) Share of employed in residence construction industry in total number of employed (R5) Rate of availability of housing in a region (R6) Number of vacant areas for residence construction (W1) Number of areas for residence construction burned by irreparable dwelling (W2) Level of engineering infrastructure objects loading (W3) Terms and conditions of acquiring rights (W4) Z1 =g1(R1) Z1 =g1(R2) Z1 =g1(R3) Z1 =g1(R4) Z1 =g1(R5) Z1 =g1(R6) Z1 =g2(W1) Z1 =g2(W2) Z1 =g2(W3) Z1 =g2(W4) Z2 =g1(R1) Z2 =g1(R2) Z2 =g1(R3) Z2 =g1(R4) Z2 =g1(R5) Z2 =g1(R6) Z2 =g2(W1) Z2 =g2(W2) Z2 =g2(W3) Z2 =g2(W4) … … … … … … … … … … Zn =g1(R1) Zn =g1(R2) Zn =g1(R3) Zn =g1(R4) Zn =g1(R5) Zn =g1(R6) Zn =g2(W1) Zn =g2(W2) Zn =g2(W3) Zn =g2(W4) Mezoeconomic aggregates (R) External factors (W) Function, which shows influence of mesoindicators and exogenous shocks on mesoagents’ functionality, is given in the form of: Z = g(R, W), where Z – vector of mesoregulators; W - vector of exogenous factors (political, administrative) in relation to residence construction segment; g – operator, which determine the regional authority’s activity. 2. Matrix of direct ascending statistical relations, which shows mesoindicators’ dependence on microeconomic indicators (tabl. 2). Tabl.2 Matrix of influence of microeconomic indicators on mesoeconomic aggregates of residence construction segment Amount of demolishing in a case of pulling down of irreparable dwelling in a region (R5) R5 =k(M1) R5 =k(M2) R5 =k(M3) R5 =k(M4) R5 =k(M5) R5 =k(M6) Volume of residence construction in a region (R1) Mesoeconomic indicators of the residence construction segment functioning (R) Microeconomic indicators of a residence construction market subject’s activity (M) Volume of residence construction by i-developer (M1) Total costs of a residence construction of 1 sq. m. built by i-developer (M2) The average price of 1 sq. m. of new houses built by i-developer (M3) The average duration of a building cycle of ideveloper (M4) Costs of demolishing in a case of pulling down of irreparable dwelling for i-developer (M5) Share of the cost of engineering infrastructure objects in a total construction costs for ideveloper (M6) R1 =k(M1) R2 =k(M1) R3 =k(M1) R1 =k(M2) R2 =k(M2) R3 =k(M2) R1 =k(M3) R2 =k(M3) R3 =k(M3) R1 =k(M4) R2 =k(M4) R3 =k(M4) R1 =k(M5) R2 =k(M5) R3 =k(M5) R1 =k(M6) R2 =k(M6) R3 =k(M6) R4 =k(M1) R4 =k(M2) R4 =k(M3) R4 =k(M4) R4 =k(M5) R4 =k(M6) R6 =k(M1) R6 =k(M2) R6 =k(M3) R6 =k(M4) R6 =k(M5) R6 =k(M6) Aggregation’s function, which determine the mesoindicators’ dependence on microeconomic indicators is given in the form of: R = k(M), where M - vector of microeconomic indicators, which determine behavior of developers at the residence construction market; k – operator of aggregation. 3. Matrix of direct descending relations, which show influence of mesoregulators on developers’ activity (tabl. 3). Tabl.3 Matrix of influence of mesoeconomic regulators on microeconomic indicators of competing developers Developer’s reputation index (M7) … Share of the cost of the engineering infrastructure objects in a total construction costs (M3) Share of costs of demolishing in a case of pulling down of irreparable dwelling in a total construction costs (M4) Volume of residence construction by developer (M1) Mesoeconomic regulators of a residence construction market subject’s activity Z1 Z2 … M1 = f(Z1) M2 = f(Z1) M1 = f(Z2) M2 = f(Z2) … … M3 = f(Z1) M3 = f(Z2) … M3 = f(Zn) M4 = f(Z1) M4 = f(Z2) … M4 = f(Zn) M5 = f(Z1) M6 = f(Z1) M7 = f(Z1) M5 = f(Z2) M6 = f(Z2) M7 = f(Z2) … … Zn M1 = f(Zn) M2 = f(Zn) M5 = f(Zn) M6 = f(Zn) M7 = f(Zn) Influence of economic policy on indicators of microsubjects’ activity is shown on figure 3, and can be defined: M = f(M, Z), operator f determines behavior of microsubjects on residence construction market according with regulating influences and external environment, as result of strategic interactions of The average duration of a building cycle (M5) Microeconomic indicators of a residence construction market subject’s activity Quality of developer’s dwelling index (M6) Number of construction areas used for residence construction (M2) Index of housing in a region (R6) The average duration of a building cycle in a region (R3) Total number of the engineering infrastructure objects built by developers (R4) The average price of 1 sq. m. of new-built dwelling in a region (R2) developers. Ways of strategic interactions of subjects are product differentiation by quality, developers’ differentiation by reputation, informational differentiation. Combine relationships between variables at one hierarchical level (strategic interactions of subjects on residence construction market at microlevel) and hierarchical relations, we have common model of hierarchical relationships on residence construction market. MESOECONOMIC INSTRUMENTS OF REGULATION OF A RESIDENCE CONSTRUCTION MARKET COMPETION Z1 М1 = f1(Z1) Z2 М2= f2(Z2) Z3 Z4 Z5 Z n-1 Мn-1 = f (Zn-1) Zn М1 М2 М3 М4 М5 Мn-1 Мn MICROECONOMIC INDICATORS OF A FIRM RIVALING ON RESIDENCE CONSTRUCTION MARKET Fig. 3 Model of strategic interactions of subjects on regional residence construction market In further research of interactions of subjects on regional residence construction market according hierarchical approach evaluation of matrix’ parameters and development of model of hierarchical relationships on residence construction market will be realized. Literature: 1. Мезоэкономика переходного периода: рынки, отрасли, предприятия. / Под ред. Клейнера Г. Б. М., 2001. 2. Перский Ю.К., Жуланов Е.Е. Конкурентная среда регионального отраслевого рынка: методы и модели. – Екатеринбург: Институт экономики УрО РАН, 2005. 3. Перский Ю.К., Шульц Д.Н. Взаимодействие микро- и макроэкономики: иерархический подход. – Екатеринбург: Институт экономики УрО РАН, 2005. 4. Перский Ю.К. Синтез макро- и микроэкономических систем в условиях трансформации российской экономики. // Вестник Пермского университета, 2002. 5. Перский Ю.К., Катаева Ю.В. Иерархическое взаимодействие субъектов регионального рынка жилищного строительства // Экономика региона, 2008. Приложение к №2(14). STRATEGIC COOPERATION OF SUBJECTS OF MICRO LEVEL OF A HIERARCHY STRATEGIC COOPERATION OF SUBJECTS OF MESO AND MICRO LEVELS OF A HIERARCHY Мn = f (Zn) М3= f (Z3) М4= f (Z4) М5= f (Z5) n-1 3 4 5 n