Tuesday, May 22, 2007

Competition Law Hurts Competitiveness

Awhile back, I have a post lamenting the Consumer Council's report advocating competition law in HK has committed the error of mistaking correlation as causality.

I then find out a reader at HK Competition Law , which has a link to my post, has made some not so friendly remarks about my post.

People have different views, that's fine with me. But that should not preclude exchange of ideas in a civilized manner, at least that's what I believe. A case in point, the gentleman up at HK Competition Law holds the view that there should be a place for competition law in HK. I don't. But that difference in opinions has not prevented the conduct of civilized exchanges between us.

The reader then went on challenging me to show him research which indicates how competition law blunts competitiveness. I thought it is a no-brainer. At least economic theory would tell us such might be the case. Instead of wasting readers' time on going through detailed economic anaylsis, I would recommend you readers to read this open letter first. If you decide to have more stuff to read after finish it, let me know.

The bottomline of the letter (and it is signed by 240 economists and let me also disclose that a couple of these economists are my former professors and Ph.D. dissertation adviser):

"Many of these cases are based on speculation about some vaguely specified consumer harm in some unspecified future, and many of the proposed interventions will weaken successful U.S. firms and impede their competitiveness abroad."

1 comment:

Peter said...

Hi Gary - just to clarify that the comments from the Hong Kong Competition Law website you're referring to above relate to our post of 8 February 2007 (http://hkcomplaw.wordpress.com/2007/02/08/hong-kong-hayek/). As you point out, these were comments left by a reader. As usual we try to maintain a neutral position ourselves (which is not always easy!). The links in you post today are a useful addition to the debate. We look forward to reading more and watching the debate unfold.