Review of Industrial Organization 21: 129–143, 2002.
© 2002 Kluwer Academic Publishers. Printed in the Netherlands.
Market Power in Chinese Taipei: Laws, Policies
and YUN-PENG CHU
Jurisprudence Division, Institute for Social Sciences and Philosophy, Academia Sinica, Nankang,
Taipei, Taiwan 11529
Economics Division, Institute for Social Sciences and Philosophy, Academia Sinica, Nankang,
Taipei, Taiwan 11529, and Industrial Economics, National Central University
Abstract. The experience of Chinese Taipei shows that opening up a previously protected market
to new entrants can be a more effective and reliable way to enhance competition than regulating the
behavior of dominant or monopolistic ﬁrms. Moreover, when opening up the market, the liberalizing
measures adopted by government should be market-structure-neutral. That is, it should not try to
dictate the direction and results of market competition. A more pressure-resistant mechanism should
be designed to deal with market power, taking the form of a regime that is cross-sector, independent
and collective in its decision-making, such as has been the case with Chinese Taipei’s Fair Trade
Key words: Cable TV, competition law, market power, merger, telecommunications.
JEL Classiﬁcations: K21, L4, L5.
The treatment of market power is an important issue in the formulation and im-
plementation of competition policies. Different regimes have been designed and
implemented in different economies to deal with the problem. We analyze the ap-
proach taken in Chinese Taipei, ﬁrst by describing the prevalence of market power,
and then investigating the government mechanisms that have been developed to
deal with it, namely legislation, government agencies, and administrative and ju-
dicial enforcement. We next assess the effectiveness of these mechanisms. The
paper concludes by deriving some lessons from Chinese Taipei for other East Asian
economies about to develop their own competition policies and institutions.