As of May 1,I will no longer be at the Dorsey law firm. Dorsey will continue to represent clients in international trade and customs matters but will no longer be handling antidumping, countervailing duty, sectionescape clause and other similar trade regulation cases. My new law firm is Harris Moure, here in Seattle and my new e-mail address is bill harrismoure. Although will miss my Dorsey friends, I am looking forward to Harris Moure, which can be found at http:
PDF Send by e-mail 1There are few subjects more important to governments than economic growth and development; the key question is how best to achieve them.
The governments of China, Hong Kong and Taiwan are no different to other jurisdictions is this respect. All three entities now subscribe, to a greater or lesser extent, to market-orientated solutions to economic problems. But few governments are prepared to tolerate a complete laissez faire economy.
All governments seek to regulate their economies to some extent or other. Socialist economics requires complete state domination of all the factors of production, whereas the majority of countries that subscribe to a capitalist model seek to ensure that the mechanism that delivers the optimal operation of markets, namely competition between rival businesses, is fostered and maintained.
These are the elements needed to achieve a competition culture. However, a competition policy cannot be effective without a legislative instrument that articulates the policy in normative terms, gives power to an enforcement body to investigate complaints, and an adjudicative mechanism to resolve disputed decisions and provide suitable penalties for those who break the law.
The legislative tool to achieve the fulfilment of this policy choice is competition or anti-trust law 1. It is not possible to microscopically examine this very large topic here 2.
However, a general survey, with illustrations of the most important facets of each system, will be attempted. The differing approaches to competition regulation resulting from the political and economic systems found in each jurisdiction will be analysed.
What is competition and competition law? The larger the number of competitors, the more efficient resource allocation will be.
The efficiency of individual firms will also be enhanced by a threat of a loss of business to competitors. Society benefits as firms will bring new products to the market place in hope that their innovation will be rewarded with a larger market share and higher profits.
Consumers also gain from the availability of choice. Thus, classical economics suggests that the closer an economy is to a state of perfect competition 3the more likely is the optimal outcome of lower prices and greater choice.
If an individual firm is successful it will achieve a large market share and high profits, but if it is unsuccessful then bankruptcy looms. Lastly, a business might, by organic growth, as a result of a superior product or business skill, obtain a position of dominance through its own merit; Microsoft might be an example of this phenomenon.
But this might lead to abuses by the dominant firm in order to inhibit the development of rivals or destroy them by the use of market power before they can challenge the incumbent in the market where it is dominant, or in an adjacent market where it seeks to expand; Microsoft was condemned by the US Federal Court 4 for exactly these practices, when it sought to use its market power to prevent Oracle browser software having equal access to the initial screen that PC manufacturers pre-loaded as part of a package sale.
Microsoft was not dominant in the browser market, but was dominant in the operating system market. Microsoft used its market power in one market to influence behaviour in the adjacent browser market.
Consequently, if perfect competition is unobtainable, what then, should be the goal of a government seeking to maximise the benefit to be obtained from capitalism? The answer appears to be seeking to achieve a position where markets are contestable, that is, seeking to ensure that firms can enter or leave any given market, so that they have the possibility of competing with incumbent market operators.
This is because individuals injured by anti-competitive practices or abusive conduct by dominant firms, may receive protection or even financial compensation as a result of the protective provisions of a competition law. All systems allow overriding public interest reasons to trump purist competition policies and to condone the establishment of monopolies or cartels or collusive arrangements that might threaten or prevent competition.
Such exceptions to the general law can include the development of new products through joint venturing, efficient utilisation of public assets, or the reward of innovatory behaviour by the grant of patent or copyright exclusivity for a fixed term. The divergence of competition policy objectives is now less apparent in the two most important competition law jurisdictions, the United States and the European Union, than was previously the case; most observers now agree with Posner that the primary objective of competition policy is to promote economic welfare 5.
China 11For the last twnty-five years China has been moving from a socialist economic paradigm to a capitalist one. Such a creation defies definition and none is given in the constitution of the PRC.
However, in moving the state away from a command and control philosophy towards a settlement where market forces tend to predominate in economic decision-making, the CCP has refused to countenance a concomitant political reform process.
This stance may well mean that an effective pro-competitive policy is impossible, as well be suggested later. China has been working on a new comprehensive competition law for almost ten years to act as the means by which the socialist-market will be policed to promote competition.
The desire to create a quasi-market but at the some time seeking to retain control of strategic or sensitive economic sectors, such as basic industries, banking and media, ineluctably means that the state will continue to have a major or even a predominant role in economic decision making.
If so, this appears to be a fundamental impediment to the effective operation of a market system policed by a standard-model competition law regime.
The huge surge in exported goods, in many ways masks the weaknesses of the domestic economy. Until recently this group of producers was either totally prohibited or allowed only limited access to domestic Chinese markets, so while the export processing and export-orientated sectors of the economy boomed as a result of cheap labour and land costs, the domestic market was largely the preserve of the state-owned enterprises SOE and to a smaller extent private domestic businesses, protected from the thrust of international competition by tariffs, quotas or other administrative measures.
Quotas will be abolished, tariffs substantially reduced, and the foreign-owned export industries will be able to sell on the domestic market without restriction.
Thus, the previously protected domestic sector will face increasingly serious challenges over the next few years. The Maoist legacy of industrial duplication of many factory facilities for example, there are over one hundred vehicle manufacturing plants in China most of which have a capacity of less than 50, units, and other industrial sectors have the same problem creates huge overcapacity and waste 9.
The effect of policy landing without regard to commercial indicators of risk has created a vast and dangerous load of bad debt that could bring down the whole financial system in China Reducing the bad debt problem is not only complex but also hugely expensive as it would require the recapitalisation of the whole system.Almost Daily Grant's “Almost Daily” is the new, end-of-day delectation from Grant’s.
ADG tells you what happened. It speculates on what may happen and tracks and develops Grant’s themes. Look for it after the New York close of trading—almost daily. The fact that future generations, neighbors, etc. will bear the brunt of environmental pollution, it goes to show that market failure can occur through means of a.
lack of . Furthermore because incomes are low, market size (for consumer goods, such as shoes, electric bulbs, and textiles) is too small to encourage potential investors.
Lack of investment means low productivity and continued low income.
Manuel Noriega, a Panamanian colonel who made himself a general officer, and later became the dictator of his country, until removed in an American military invasion, has died at the age of 83, following an operation to remove a brain tumor. When Malcolm Turnbull wrote to his electorate last week outlining his achievements he listed economic growth, jobs, same-sex marriage and a number of really big construction projects including.
After being taken down twice by Blogger within a single week, we got the message: It’s Time To Go. Gates of Vienna has moved to a new address.