The benefits of competition on our economy

In the United States, we believe that the sole objective of competition policy is consumer welfare.

success of competition policy in south africa

The Way Forward Ultimately, curing what ails the U. This thinking solidified under the Reagan Justice Department, and for better or worse, the antitrust authorities stood by over the coming decades as the economy grew more concentrated.

And, unfortunately, enforcement of a competition law can have negative consequences on competition and on the economy as a whole if the law restricts too broad a range of conduct, if it is too inflexible to changing markets, or if its enforcement is not based on sound economic analysis.

The argument for reexamining current merger guidelines — and, where appropriate, challenging the case law that is said to make Department of Justice and FTC lawyers reluctant to bring cases — is very strong.

Business investment across the economy has perked up lately, but it is not as robust as one might expect given the surge in profits, the extraordinarily low-cost of equity and debt, and the amount of cash on corporate balance sheets. The current practice of JFTC criminal accusations once every two or three years is unlikely to be predictable enough to contribute to the deterrence of these otherwise very profitable, and very harmful practices.

Over the last ten years the Antitrust Division has successfully prosecuted more than companies and almost individuals for engaging in illegal cartel activities.

In most though not all cases, the data points to a lack of competition.

Four benefits of competition in an economy

You may not have that much of a preference about what features are in a tube of toothpaste, but find yourself standing in the toothpaste aisle having trouble making a decision because there are too many options. They find a similar pattern in banking. Seen through the hero lens, the prospect of selling out to Facebook or Google or Apple offers many economic advantages. When too many businesses produce the same products, the market becomes flooded. Free market competition can also lead to monopolies, with the biggest players dominating the market and ultimately leading to fewer, lower quality choices. When your competitors make more profit than you, it means that they have adopted some great techniques to attract customers. This means, to repeat one of my favorite sayings, that "efficiency is the goal, competition is the process. As goods are overproduced, inventory piles up. Having too many choices can also complicate purchasing decisions. Although it seems on the surface that economic competition leaves you with a smaller slice of the pie and a smaller share of your target market, economic competition can also benefit both businesses and customers. Reshaping the Antitrust Framework In remedying the harmful effects of industry consolidation and declining competition, an obvious place to start is antitrust regulation and enforcement.

The first is in the area of merger enforcement. Recent research pins rising beer prices to greater concentration in the industry.

benefits of competition in society

Mergers can, of course, harm the competitive process where, for example, a merger between competing firms eliminates competition between the parties and provides the merged firm with the power to raise price or exclude competition.

After the merger fell through, some argued that T-Mobile was doomed. Thus, you can easily know the pulse of your customers and this can be utilized to make your business successful.

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What Are the Advantages & Disadvantages of Economic Competition?