Competition Policy and Business

Competition Policy and Business by LearnCorp Training Pty Ltd

 

• Governments encourage competition
• Competition is good for an economy
• Higher competition leads to higher efficiency of firms
• Competition must occur in an environment of equal opportunity for all participants

 

Issues Addressed by Competition Policy:

 

• Consumer protection
• Resource allocation
• Market power
• Microeconomic reform
• Impacts of government

 

Regulatory Efficiency (RE)

 

RE refers to the efficiency with which a government can regulate a market. Too much regulation is too inefficient, too little is ineffective.

 

Guidelines for RE:

 

• Written rules are a must
• Consultation with interest groups
• Alternatives to regulation must be explored (e.g. codes of conduct)
• Setting an expiry date on the regulation will allow reviews to occur (good)
• Scrutiny of regulation is important

 

Co-opetition:

 

Too much regulation may lead to firms cooperating with one another (against the regulation) rather than competing with one another. This is called co-opetition (blurring the edges or complementarities)

 

 

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