Competition Policy under Laissez-Faireism: Market Power and its Treatment in Hong Kong

Competition Policy under Laissez-Faireism: Market Power and its Treatment in Hong Kong The paper describes the current competition policy framework in Hong Kong: how it came into existence, what business practices are prohibited, and how the enforcement system works. Recent cases in the telecommunications industry are used to illustrate the sectoral approach, a unique feature of Hong Kong's competition policy. We argue that a sectoral approach faces two fundamental drawbacks. First, due to having different ``rules of the game'' for different sectors, the allocation of resources may be distorted in the long run. Second, since the relevant regulatory agencies perform dual roles both as competition policy enforcer and as traditional regulator of natural monopolies, the impartiality of their competition decisions may not be credibly conveyed to the public. We also address other specific problems associated with the sectoral approach, such as the exclusion of structural issues, narrow coverage of sectors, and the lack of public enforcement. We conclude that an overall competition law can better promote competition and economic efficiency in Hong Kong. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Competition Policy under Laissez-Faireism: Market Power and its Treatment in Hong Kong

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2002 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1019621426648
Publisher site
See Article on Publisher Site

Abstract

The paper describes the current competition policy framework in Hong Kong: how it came into existence, what business practices are prohibited, and how the enforcement system works. Recent cases in the telecommunications industry are used to illustrate the sectoral approach, a unique feature of Hong Kong's competition policy. We argue that a sectoral approach faces two fundamental drawbacks. First, due to having different ``rules of the game'' for different sectors, the allocation of resources may be distorted in the long run. Second, since the relevant regulatory agencies perform dual roles both as competition policy enforcer and as traditional regulator of natural monopolies, the impartiality of their competition decisions may not be credibly conveyed to the public. We also address other specific problems associated with the sectoral approach, such as the exclusion of structural issues, narrow coverage of sectors, and the lack of public enforcement. We conclude that an overall competition law can better promote competition and economic efficiency in Hong Kong.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 13, 2004

References

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