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A Case for Affirmative Action in Competition Policy

  • Villeneuve, Bertrand
  • Zhang, Vanessa Yanhua

We analyze the trade-off faced by competition authorities envisaging a one-shot structural reform in a capitalistic industry. A structure is (1) a sharing of productive capital at some time and (2) a sharing of sites or any other non-reproducible assets. The latter represent opportunities. These two distinct dimensions of policy illustrate the importance of a dynamic theory in which firms may differ in several respects. Though equalization of endowments and rights is theoretically optimal, realistic constraints force competition authorities to adopt second-best solutions. Affirmative action here appears to explain why helping the disadvantaged contributes maximally to social surplus.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9700.

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Date of creation: 23 Jul 2008
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Handle: RePEc:pra:mprapa:9700
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  10. Jun Ishii & Jingming Yan, 2007. "Does divestiture crowd out new investment? The “make or buy” decision in the U.S. electricity generation industry," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 185-213, 03.
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