Content
Introduction
The Concept And Logic Of Competition
Competition Versus Contestability
Ragulation Of Competition
Tests Of A Goods Competition Policy
Policy Effectiveness And The Concept Pf Regulatory
Capture
Factor Contributing To Competitive Environment In India
Public Sector Disinvestment And Privatisation
Opening Up Of New Sector To Private Enterprise
Delicensing
De-Reservation Of Ssi Items
Conclusion
INTRODUCTION
An important hallmark of the process of economic reforms initiated in the country in 1991 is that it has made the economy more competitive as compared to the pre-reform period. Though the degree of competitiveness in the business environment in India is much less and compared to a number of industrial market economies in Europe and North America and a number of emergent market-economies in east-Asia and elsewhere, there have been clear sign to movement.
THE CONCEPT AND LOGIC OF COMPETITION
There is enormous literature on the rationale and benefits of market competition competitive markets. Standard managerial economics tells us that given the resources and technology, an economy is efficient when it is able to provide its consumers with most desired range of product at minimum cost and this is possible under the mechanism of a competitive market.
COMPETITION VERSUS CONTESTABILITY
Competition may be distinguished from contestability. In standard managerial economics, contestability refers to the which a firm can enter or leave the industry. Firms enter the industry as they are attracted by profits and tend to leave average variable cost at prevailing level of output when they are not able to recover the normal price or the.
RAGULATION OF COMPETITION
As already pointed out, market competition, particularly between firms of highly unequal, competitive strength, can be self-destructive. I unregulated markets, there can be widespread negative spillover effect called ‘competitive externalities’.
TESTS OF A GOODS COMPETITION POLICY
The competition policy of a country generally refers to a set of government measures aimed stimulating competition, encouraging growth, preventing monopolistic, restrictive and unfair trade practices, promoting efficiency and protecting the right of the consumers.
POLICY EFFECTIVENESS AND THE CONCEPT PF REGULATORY
CAPTURE
As already pointed out, the competition policy must be flexible and adaptable to changing circumstances. Quantitative restriction and limits often erode the basic spirit of the policy and sometimes prove counter-productive, For example, a ceiling of 30per cent on the market share as part of definition of a dominant firm may deny it scale economies that may be necessary for it to be competitive in the global market.
FACTOR CONTRIBUTING TO COMPETITIVE ENVIRONMENT IN INDIA
Since the beginning of economic reforms in 1991, there has been a gradual build up the competitive environment in the country.
PUBLIC SECTOR DISINVESTMENT AND PRIVATISATION
Since the beginning of the reform process in 1991, there has been an almost consistent program of privatization through public sector disinvestments. During 1991-2003, the sum total of the annual disinvestments target was
Rs78,300crore of which, however, about 38 per cent was realized.
OPENING UP OF NEW SECTOR TO PRIVATE ENTERPRISE
Another factor adding directly to competition has been the opening up of sectors earlier reserved for the public sector to private enterprise. During the last two decades, the number of industries Exclusively reserved for the public sector has been gradually declining.
DELICENSING
Competitive environment in the country has significantly increased with delicensing of a large number of industries. Delicensing reduce entry barriers, encourages the flow of private investment and encourages competition.
DE-RESERVATION OF SSI ITEMS
During the period 1996-2003, about 100 items earlier reserved for exclusive production by the small scale industries were de-reserved and allowed for production by medium and large industrial unit as well.
LIBERALISATION OF FOREIGN DIRECT INVESTMENT (FDI)
Though the inflow the foreign direct investment in the country has been weak in spite of economic reforms and liberalization of FDI policy,
INFRASTRUCTURE DEREGULATION AND FACILITATION
Infrastructure deregulation has produced a twin effect from the point of view of competition :
• Increase in the number of firms engaged in infrastructure projects and related service and
• Corporation of a number of public utilities and their functioning along modern corporate lines.
IMPORTANT COMPETITION
During the reform years, competition has increased not only between the domestic enterprises but also between domestic and foreign firms via imports.
HIGH-GROWTH INDUSTRY SEGMENT
A competitive environment is characterized by a large number of firms in each product category. The smaller the number of firms the narrower is the competition.
INDIA’S PRESENT COMPETITION POLICY
India’s present competition policy is contained in the latest Competition Act 2002. The basic objectives of the Act are:
• To prevent practice having adverse effect on competition
• To promote and sustain competition in market
• To protect the interests of consumers and
• To ensure freedom of trade carried on by other participants in one market.
Conclusion
The commission further as the responsibilities of providing advice to the government on matter relating to competitive policy
Introduction
The Concept And Logic Of Competition
Competition Versus Contestability
Ragulation Of Competition
Tests Of A Goods Competition Policy
Policy Effectiveness And The Concept Pf Regulatory
Capture
Factor Contributing To Competitive Environment In India
Public Sector Disinvestment And Privatisation
Opening Up Of New Sector To Private Enterprise
Delicensing
De-Reservation Of Ssi Items
Conclusion
INTRODUCTION
An important hallmark of the process of economic reforms initiated in the country in 1991 is that it has made the economy more competitive as compared to the pre-reform period. Though the degree of competitiveness in the business environment in India is much less and compared to a number of industrial market economies in Europe and North America and a number of emergent market-economies in east-Asia and elsewhere, there have been clear sign to movement.
THE CONCEPT AND LOGIC OF COMPETITION
There is enormous literature on the rationale and benefits of market competition competitive markets. Standard managerial economics tells us that given the resources and technology, an economy is efficient when it is able to provide its consumers with most desired range of product at minimum cost and this is possible under the mechanism of a competitive market.
COMPETITION VERSUS CONTESTABILITY
Competition may be distinguished from contestability. In standard managerial economics, contestability refers to the which a firm can enter or leave the industry. Firms enter the industry as they are attracted by profits and tend to leave average variable cost at prevailing level of output when they are not able to recover the normal price or the.
RAGULATION OF COMPETITION
As already pointed out, market competition, particularly between firms of highly unequal, competitive strength, can be self-destructive. I unregulated markets, there can be widespread negative spillover effect called ‘competitive externalities’.
TESTS OF A GOODS COMPETITION POLICY
The competition policy of a country generally refers to a set of government measures aimed stimulating competition, encouraging growth, preventing monopolistic, restrictive and unfair trade practices, promoting efficiency and protecting the right of the consumers.
POLICY EFFECTIVENESS AND THE CONCEPT PF REGULATORY
CAPTURE
As already pointed out, the competition policy must be flexible and adaptable to changing circumstances. Quantitative restriction and limits often erode the basic spirit of the policy and sometimes prove counter-productive, For example, a ceiling of 30per cent on the market share as part of definition of a dominant firm may deny it scale economies that may be necessary for it to be competitive in the global market.
FACTOR CONTRIBUTING TO COMPETITIVE ENVIRONMENT IN INDIA
Since the beginning of economic reforms in 1991, there has been a gradual build up the competitive environment in the country.
PUBLIC SECTOR DISINVESTMENT AND PRIVATISATION
Since the beginning of the reform process in 1991, there has been an almost consistent program of privatization through public sector disinvestments. During 1991-2003, the sum total of the annual disinvestments target was
Rs78,300crore of which, however, about 38 per cent was realized.
OPENING UP OF NEW SECTOR TO PRIVATE ENTERPRISE
Another factor adding directly to competition has been the opening up of sectors earlier reserved for the public sector to private enterprise. During the last two decades, the number of industries Exclusively reserved for the public sector has been gradually declining.
DELICENSING
Competitive environment in the country has significantly increased with delicensing of a large number of industries. Delicensing reduce entry barriers, encourages the flow of private investment and encourages competition.
DE-RESERVATION OF SSI ITEMS
During the period 1996-2003, about 100 items earlier reserved for exclusive production by the small scale industries were de-reserved and allowed for production by medium and large industrial unit as well.
LIBERALISATION OF FOREIGN DIRECT INVESTMENT (FDI)
Though the inflow the foreign direct investment in the country has been weak in spite of economic reforms and liberalization of FDI policy,
INFRASTRUCTURE DEREGULATION AND FACILITATION
Infrastructure deregulation has produced a twin effect from the point of view of competition :
• Increase in the number of firms engaged in infrastructure projects and related service and
• Corporation of a number of public utilities and their functioning along modern corporate lines.
IMPORTANT COMPETITION
During the reform years, competition has increased not only between the domestic enterprises but also between domestic and foreign firms via imports.
HIGH-GROWTH INDUSTRY SEGMENT
A competitive environment is characterized by a large number of firms in each product category. The smaller the number of firms the narrower is the competition.
INDIA’S PRESENT COMPETITION POLICY
India’s present competition policy is contained in the latest Competition Act 2002. The basic objectives of the Act are:
• To prevent practice having adverse effect on competition
• To promote and sustain competition in market
• To protect the interests of consumers and
• To ensure freedom of trade carried on by other participants in one market.
Conclusion
The commission further as the responsibilities of providing advice to the government on matter relating to competitive policy
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