Talk:Competition (economics)/Archive 1

Archive 1

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Can competition-based market structures earn economic profits in the long run? Mathwhiz 29 (talk) 05:21, 7 January 2008 (UTC)

Even perfectly compeitive markets will return a profit over any time horizon, but it will be smaller and fairer than one accruing under a monopoly. in economics profit is the return on entreprise, a factor of production, thus if there are no profits to be made no entrepreneurs will produce that good or service. Thus profits are part of a signalling system that allocates resources.AleXd (talk) 12:23, 7 January 2008 (UTC)

Thanks :) Mathwhiz 29 (talk) 22:29, 10 January 2008 (UTC)

I thought in the long run profits were always zero, while revenue wasn't necessarily 0. --146.163.44.228 (talk) 23:41, 25 March 2008 (UTC)

Dr. Pittman's comment on this article

Dr. Pittman has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"Where externalities occur, or monopolistic or oligopolistic conditions persist, or for the provision of certain goods such as public goods, the pressure of the competitive process is reduced."

The issue is not that the pressure of the competitive process is reduced; the issue is that under those conditions there is no reason to believe that competition leads to an efficient solution. In general, the presence of any of those factors is an argument in favor of some form of regulatory intervention by government to move the outcome closer to the efficient level and improve economic welfare. Citations here could include Amartya Sen, Choice, Welfare and Measurement, MIT Press; Atkinson, Anthony B., Optimum population, welfare economics, and inequality, Oxford University Press, London; and Joseph E. Stiglitz (2000). Economics of the Public Sector, 3rd ed. Norton.

"These situations are known as natural monopoly and are usually publicly provided or tightly regulated.[citation needed] " There is a large literature here. Two very good citations would be Alfred Kahn, The Economics of Regulation (MIT Press, 1970, repr. 1988), and Christopher Decker, Modern Economic Regulation (Cambridge, 2014).

"Depending on the respective economic policy, the pure competition is to a greater or lesser extent regulated by competition policy and competition law." The phrasing may be a bit tendentious and misleading. Competition law and policy -- at least in rationale and motivation -- seek to protect competition, not to regulate it (and certainly not to limit it). They do this, as mentioned to some degree elsewhere in the article, in three principal ways: prohibiting and punishing cartels, attaching exclusionary conduct by single firms ("abuse of a dominant position" in most countries, "monopolization" in the US), and preventing anticompetitive mergers and acquisitions.

"Finally, most businesses also encourage competition between individual employees.[citation needed]"

I am skeptical that "most" businesses do this. Certainly some citation is needed.

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Dr. Pittman has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Russell Pittman, 2011. "Blame the Switchman? Russian Railways Restructuring After Ten Years," EAG Discussions Papers 201103, Department of Justice, Antitrust Division.

ExpertIdeasBot (talk) 21:42, 30 May 2016 (UTC)

Dr. Faig's comment on this article

Dr. Faig has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

This is a very good discussion about competition in economics.

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Dr. Faig has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Miquel Faig & Xiuhua Huangfu, 2006. "Competitive-Search Equilibrium In Monetary Economies," Working Papers tecipa-217, University of Toronto, Department of Economics.

ExpertIdeasBot (talk) 15:08, 24 June 2016 (UTC)

Dr. Carbo Valverde's comment on this article

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This entry can be improved to a large extent. It should incorporate a brief description of the evolution and structure of Industrial Organization theory, from the structure-conduct-performance paradigm to modern theories, including complex forms of competition, network economics and platform competition. I would follow and cite:

Handbook of Industrial Organization Volume 1, Pages 3-947l (1989) Edited by R. Schamalensee and R. Willig Elsevier Science: http://www.sciencedirect.com/science/handbooks/1573448X/1

Handbook of Industrial Organization Volume 2, Pages 951-1555 (1989) Edited by R. Schamalensee and R. Willig Elsevier Science: http://www.sciencedirect.com/science/handbooks/1573448X/2

Handbook of Industrial Organization Volume 3, Pages 1557-2440, I-1-I-34 (2007) Edited by M. Armstrong and R. Porter

Elsevier Science: http://www.sciencedirect.com/science/handbooks/1573448X/3

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We believe Dr. Carbo Valverde has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Carbo Valverde, Santiago & Fernandez de Guevara y Rodoselovics, Juan & Humphrey, David & Maudos, Joaquin, 2009. "Estimating the intensity of price and non-price competition in banking," MPRA Paper 17612, University Library of Munich, Germany, revised 2009.

ExpertIdeasBot (talk) 15:26, 11 July 2016 (UTC)

Dr. Calzolari's comment on this article

Dr. Calzolari has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

- "competition is the rivalry among sellers" in fact competition may be also between buyers, such as in auctions. In fact, later on in "Competition in practice" reference to competition among consumers is first illustrated

- the section "Anti-competitive practices" could contain many more hyperlink, for example on collusion, and abuse of dominant position.

- the "See also" section contains entries that are relevant but certainly not the most important and seem random.

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• Reference : Calzolari, Giacomo & Scarpa, Carlo, 2007. "Regulating a Multi-Utility Firm," CEPR Discussion Papers 6238, C.E.P.R. Discussion Papers.

ExpertIdeasBot (talk) 15:37, 24 August 2016 (UTC)

Dr. Scarpa's comment on this article

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an entry such as "competition" could be written in 1000 different ways. This is one of the ways of doing it, and it is a good way.

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• Reference : Calzolari, Giacomo & Scarpa, Carlo, 2007. "Regulating a Multi-Utility Firm," CEPR Discussion Papers 6238, C.E.P.R. Discussion Papers.

ExpertIdeasBot (talk) 20:06, 24 September 2016 (UTC)

Dr. Schlicht's comment on this article

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Some sketchy remarks, unfortunately not well organized, in case someone feels that one or the pother point may deserve some further attention.

I would prefer to characterize the rationale of economic competition differently, not starting from rivalry (which is a concept applicable to few competitors and thereby excludes competition among many) but, for ommodity markets, from profit maximization of the individual in combination with free entry. By allowing for personal profit, an incentive is created for each supplier to improve the quality of the product - which would permit an increase in price - or to reduce to costs of production. The entailed increase in profit is curbed by competition because other suppliers will enter profitable businesses, and this will reduce the price to a normal level. (This is essentially how Alfred Marshall would characterize competition.)

I would suggest to distinguish in which dimension competition takes place: In the commodity market in the labor market among institutional and organizational forms

In the commodity market, there are again several dimensions: price competition, quality competition. Both occur jointly and involve building up reputation. Further there is latent (or potential) competition that leads to limit pricing to prevent entry of new competitors. The idea is also developed in contestable market theory. Here would also be the place to discuss barriers to entry, monopolistic competition, oligopolistic competition and perfect competition, as illustrated by e.g. capital markets.

In the labor market, different problems arise. These should be covered in the articles about labor markets and efficiency wages and linked accordingly.

Regarding institutions it has been argued in the theory of property rights that property rights evolve such as to cope with scarcity, that legal rules and institutions evolve such as to minimize transaction costs.

The remark on perfect-imperfect competition is written from a marginalist perspective which is theoretically nice but empirically problematic, as most firms engage in full cost pricing. (No clear distinction is drawn between competition as an as-if concept in Friedman's sense, and a pragmatic concept, as encountered in law and competition policy.) The term "monopolistic competition" is to be preferred over "imperfect competition", because there are other concepts of competition, in particular non-marginalist conceptions like "workable competition". A brief reference to the marginalist controversy of the '50s may be apposite.

I see some omissions: A major lacuna relates to institutional economics where it is assumed that more efficient institutions outcompete less efficient ones. This applies to the theory of property rights,to the theory of the firm, to law and economics, the history of economics.

I miss mentioning of contestable markets, winner-takes-all competition, contest theory.

Another omission refers to the rules of the game in which competition takes place. These rules ought to prevent inefficient competition like arms races. Without a stable and enforced system of property rights, thieves may compete with each other and no-one would produce. (Hence the statement "Competition is seen as a state which produces gains for the whole economy, through promoting consumer sovereignty" is problematic if the not complemented by reference to an appropriate legal or customary (normative) framework. Likewise, a system of standards and measures improves the the economic performance of competition.

There is also a small literature on the effect of competition on the character of society. Does a competitive environment kindle selfishness? Marx thought so, Alfred Marshall (in Economics of Industry) argued against it, and empirically he seems to be right, as I have argued in my article "Social Evolution, Corporate Culture, and Exploitation".

Perhaps this is enough for the time being. It seems to me a very demanding job to write the entry, which is already quite good.

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We believe Dr. Schlicht has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Schlicht, Ekkehart, 2009. "Selection wages and discrimination," Economics Discussion Papers 2009-35, Kiel Institute for the World Economy.

ExpertIdeasBot (talk) 11:27, 22 December 2016 (UTC)