Micro Gains from Micro Reform
AbstractLarge estimates of the benefits of microeconomic reform have been put forward in official studies. By contrast, Quiggin (1997) concludes that benefits of microeconomic reform have been modest. A key area of disagreement relates to the claim that increased competition leads to increases in technical efficiency. In the present paper, this issue is addressed. Possible sources of efficiency gains, including scale economies, technological innovations, X-efficiency gains and the removal of satisficing behavior, are considered. It is concluded that although ideas such as X-efficiency and satisficing suggest that competition may in some cases improve efficiency they do not imply that free market policies will maximise welfare. Overstated claims about the benefits of microeconomic reform have distorted Australia's economic priorities and encouraged an uncritical acceptance of economically unsound policies proposed in the name of competition.
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Bibliographic InfoArticle provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).
Volume (Year): 28 (1998)
Issue (Month): 1 (March)
Behavior; Microeconomics; Satisficing;
Find related papers by JEL classification:
- D00 - Microeconomics - - General - - - General
- J00 - Labor and Demographic Economics - - General - - - General
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