Abstract
Competition policy has been dominated by politics. Industrial Organization can expect to exert an influence only insofar as it commands superior knowledge. That is true with respect to the long run. Since economies of scale are limited to the short run, competition is feasible in the long run. Therefore a trade-off approach seeking to identify optimal market structures is misleading. Competition policy should instead be directed at prohibiting protective strategies of incumbents to deter entry. Competition being a process of ‘creative destruction’, political viability of a competitive order requires competition policy to be supplemented by a social welfare policy.
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