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The Role of Governments in the Promotion of Competition: The Legacy of Professor Kirzner in Policy Making

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  • De León Ignacio

    (Econlex Development Strategies)

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    Abstract

    This paper contends that the identification of a pro-competitive agenda in the process of regulatory reform undertaken in many developing countries ultimately rests on the vision held by the authority about the sources of market failures. Conventional IO theory rests on the assumption that the exercise of market power by incumbent firms limits the access of potential competitive entrants, and therefore, regulation should curb such power. However, the existence of market power is an inference from conventional thinking on markets and competition. Professor Kirzner overturned this thinking, by introducing a realistic process perspective of markets, instead of the traditional structural view. Beyond the philosophical question of “realism,” the market process view sustains practical policy making advantages, mostly due to the lack of knowledge requirements placed upon the regulatory agencies to allocate resources more efficiently. The process view suggests the need of creating a proper institutional setting for firms to freely interact, rather than on impinging in the allocation of resources itself according to unreliable contrived views of market efficiency. Based on Kirzner´s process view, this paper outlines an alternative network competition perspective, focused on the integration of complementary capabilities, as a regulatory yardstick. This view balances the rights of incumbent firms to exploit their rights, and the possibilities of third parties to integrate into the network concerned on a non-discriminatory basis, thereby preserving the investments of incumbents on a more equitable basis.Cet article affirme que l’agenda proconcurrentiel de réforme réglementaire entrepris dans plusieurs pays en développement repose en fin de compte sur la vision qu’a l’autorité concernant les échecs de marché. La théorie conventionnelle d’organisation industrielle suppose que l’exercice du pouvoir marchand par les firmes existantes limite l’accès de concurrents potentiels et, qu’en conséque- nce, la réglementation devrait brider ces pouvoirs. Cependant, l’idée qu’il existe un pouvoir marchand est une émanation de la pensée conventionnelle à propos des marchés et de la concurrence. En opposant une vision réaliste du processus marchand à la vision structurelle traditionnelle, le Professeur Kirzner a réduit à néant ce mode de pensée conventionnelle. Audelà de la question philosophique du “réalisme”, la vision procédurale de marché affirme que la politique de réglementation est un échec car les agences de réglementation ne disposent pas des connaissances nécessaires requises pour affecter les ressources de manière efficace. La vision procédurale suggère le besoin de créer un environnement institutionnel dans lequel les entreprises peuvent interagir entre elles plutôt que d’empiéter sur l’affectation des ressources en ellemême comme le suggère la perspective artificielle et peu fiable de l’efficacité marchande. Se fondant en cela sur la vision procédurale de Kirzner, cet article ébauche une perspective différente du réseau concurrentiel dont l’étalon est l’intégration des capacités complémentaires. Dans cette vision, les droits des firmes existantes à exploiter leurs droits ont comme contrepoids les possibilités de tierces parties à s’intégrer dans le réseau concerné sur une base nondiscriminatoire, préservant ainsi les investissements des entreprises existantes suivant une base plus équitable.

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    File URL: http://www.degruyter.com/view/j/jeeh.2002.12.1/jeeh.2002.12.1.1054/jeeh.2002.12.1.1054.xml?format=INT
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    Bibliographic Info

    Article provided by De Gruyter in its journal Journal des Economistes et des Etudes Humaines.

    Volume (Year): 12 (2002)
    Issue (Month): 1 (March)
    Pages: 1-20

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    Handle: RePEc:bpj:jeehcn:v:12:y:2002:i:1:n:12

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    Web page: http://www.degruyter.com

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