Their Implications for Competition Law
Edited by Michal S. Gal, Mor Bakhoum, Josef Drexl, Eleanor M. Fox and David J. Gerber
Chapter 2: What features measure economic competition in developing countries?
In this chapter we will examine whether developing countries possess special traits that distinguish them from countries undergoing further stages of economic development, as far as competition policy is concerned, and associated with this, aim to identify the relevant metrics to assess competition policy effectiveness in these countries. The central question of this chapter is, therefore, about the special features of competition policy in developing countries, which are distinct from that applied in industrialized countries. Usually, this question has been answered with the help of textbook economics, associating the tenets of the so-called ‘SCP Paradigm’ developed by Joe Bain (1959) with the market structure that prevails in these countries, presumably, that is, ubiquitous high concentration and market information asymmetries. In contrast, we take an institutional approach in this chapter that links competition policy’s effectiveness to the presence of reliable institutions and a policy agenda aligned with the protection of the rule of law. This is the sort of institutional setting that encourages the competitive endeavors of market agents in searching for market information gaps that they can profit from, by filling them with ‘better’ information about products or services until then unknown or inaccessible to consumers. In this ‘trial and error’ perspective of competition, market dominance, which is a key competitive factor under textbook economics, appears to be the outcome of the market process, rather than its prerequisite.
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