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Competition Policy: Some Neglected Issues in the Hilmer Report
Author(s) -
Freebairn John
Publication year - 1995
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/j.1467-8462.1995.tb00991.x
Subject(s) - monopolistic competition , transaction cost , legislature , competition (biology) , marginal cost , economics , industrial organization , database transaction , natural monopoly , competition policy , market structure , microeconomics , barriers to entry , public economics , business , monopoly , computer science , political science , ecology , biology , programming language , law
The Hilmer Report focuses primarily on the very important issues of legislative and regulatory measures to directly reduce monopolistic structures and conduct. This article argues that competition policy also should embrace measures to reduce transaction costs. Lower transaction costs increase the substitutability of different options and help to extend the competitive market, and particularly to reduce entry barriers for new entrants and for innovations. Contrary to Hilmer, the article argues that economic theory, and particularly the marginal cost concept, can and should have a central role in the assessment of monopolistic behaviour and in the determination of access prices to ‘essential services’ provided by natural monopolies.