Towards a competitive society? : the promotion of competition as a goal of economic policy

Abstract

This paper discusses the problems involved in considering competition policy as a separate area of economic policy. Two problems are given special attention. The first is the doubtful efficiency gain from enforcing competitive conditions in one industry when other industries are not operating at their competitive levels; this is a classical problem in the theory of the second best. The other is the justification for defining competition policy solely in terms of efficiency without regard for distributional effects. It is argued that the concern for distribution is the main reason why labour and agricultural markets, as well as the markets for public services, have to a large extent been immune to interference from competition policy.