The purpose of this study is to examine and analyze the developing process of workable competition theory that gives the theoretical bases to anti-monopoly policies and industrial organization policies.
The policies for industrial organizations, wi...
The purpose of this study is to examine and analyze the developing process of workable competition theory that gives the theoretical bases to anti-monopoly policies and industrial organization policies.
The policies for industrial organizations, with an intention to increase the efficiency of the private enterprise activities through competition, are applied to and have an effect on the industrial organization of a nation. It can be comparatively said that while the Keynes' financial and monetary policies are if a quantitative nature, the policies for industrial organization have a qualitative nature. The broad and abstract purpose of economic policies is to enhance the economic welfare, and in as much as the enhancement is realized in concrete forms of economic growth, price stability, fair income distribution, full employment, progress and efficiency have a part in economic policies.
Advanced countries have evolved the theory of industrial organization with a stress on the means of stimulating competition and prohibiting monopoly. At the same time, they have also developed the policies for industrial organization aiming particularly to stimulate competition and to improve their economic conditions. It is literally proper to study the industrial organization theory and the rationale of anti-monopoly policies because the main object of the policies for industrial organization is to stimulate competition between private enterprises.
The competition stimulating policies the anti-monopoly policies as it is synonymously said have been based upon the principles of "perfect competition" and "competition between big enterprises" and have prevented any crisis of democracy which may arise from excessive profits and inefficient distributions made by the monopolists' market shares. These policies have been under laid with the Jefferson's ideology if democracy and with the optimum distribution of resources pursued by the traditional price theory.
The earliest anti-monopoly policies, the Sherman Act, were established on the basis of the traditional price theory including the efficiency of price mechanism which is equivalent to the principle of perfect competition. Nevertheless, since the matters caused by the execution of these earliest policies were often judged by the courts according to the equity of the Sherman Act, the rationale of the perfect competition had to be transferred to the principle of 'workable competition' in respect of their practical applications. This traditional 'workable competition' has been arranged and embodied in the course of discussion about the rationale of market structure and market performance. In another approach, professor Mason suggests to modify the rationales of market structure and the market performance into a unified rationale of anti-monopolistic theory. HE points out that, as these two rationales have the merits and demerits respectively, it is not advisable to concentrate on either one of them. He insists that the two rationales should be practically harmonious to each other supplementing each other.
By a harmonious way, Mason sees the rationale of market structure theory as the basis of the laws and supplemented by the rationale of the market performance that is dynamic and long-term in nature.
The rationale theory needed for anti-monopoly policies has developed further since the theorization of the J.S.Bain's industrial organization theory. The industrial organization theory, having its basis on price theory and using the concepts of market structure, market conduct, and market performance, analyzes industrial organizations. Today's industrial organization theory, standing on the bases of the abovementioned three rationales and seeking for a desirable direction, tries to analyze and evaluate individual enterprise from a synthetic point of view.
Nevertheless, our attention should be called to the fact that there still exists the confliction between the three rationales, for the sociological way of thinking and the Weltanschauuug of the person who is to evaluate the monopoly enterprise have a big influence on the evaluation.
As the industrial organization theory developed and its verifying analysis spread widely, the workable competition has also developed, and it is reflected in the implementation of the antimonopoly policies. The Jurisdiction Committee of the United States gives, as the concrete and basic guideline, the ten points in which the Bains industrial organization theory is fully reflected.
Although the weights on importance these ten requirements have respectively are not clear and they are not in complete harmony each other, they are not only inclusive but realistic compared with the rationales of the market structure, of the market performance, and of the market conduct.
In conclusion, the workable competition theory as anti-monopoly policies has logically many theoretical defects. However, since no attempt for a new theory as anti-monopoly policies has yet succeeded to replace, it the workable competition theory is useful, and effective.