Market Regulation and Competition Policy –Towards a Dynamic Economy in the Benefit of Consumers

Despite the many efforts in the advocacy of competition, we find a great difficulty in determining the appropriate mechanisms to introduce this discipline in the assessment of existing and proposed regulation.Many actors in the public sphere in charge of creating and implementing the regulatory regime ignore the great benefits that competition policy brings to society at large.In addition, when there is a certain level of awareness of such benefits, there is no consensus on the level of importance of analyzing market regulation through the lens of competition policy.This lack of consensus may be motivated by the fact that it is not easy to quantify the gains of eliminating the excessive restrictions on competition.Finally, some markets continue to be highly regulated for many different reasons, i.e. political and social goals, which can hinder the task of promoting the efficient allocation of resources. II. A need for regulations? Their origins and resultsThere are many problems that State intervention aims to solve and, in some cases, this intervention takes the form of regulations.These problems that provide a justification for the existence of regulations are deemed to be caused by the excesses or shortcomings of the free market economy.Consequently, the mechanisms that are usually adopted are designed to control the forces of the market in order to achieve certain results, which can be: 3 The mechanisms that are usually implemented to achieve the abovementioned results include price controls, trade barriers, and establishing the level of output among others.This market controlling regulations often result in limited gains produced at a very high cost to society.The reason for this is that there is limited understanding of the incentives that this type of regulations provide to enterprises.For example, trade barriers in most cases aim to promote the growth of national industries by protecting them from foreign competition that is believed to have a certain advantage, but experience has shown that in reality these protected industries, instead of investing and seeking more efficient ways to produce, exploit the protection in order to enhance their rents at the expense of consumers.advance the public interest, address market failure, protect strategic industries, and address redistributive concerns, among others.4 It is also a valid position to affirm that neo-liberal policies failed in the 90's to achieve a suitable model for growth and that the market was not able to regulate itself to prevent inefficient results 5 3 Other authors provide different categorizations of possible justifications for regulations.Crampton and Facey group them in the following categories: Correct market failure, advance the public interest, advance special interests, to assist in the transition to a competitive market.Crampton, Paul & Facey, Brian, Revisiting Regulation and Deregulation through the Lens of Competition Policy: Getting the Balance Right, World Competition 25(1), Kluwer International Law, 2002, p. 31.The list presented above is not meant to be a categorization, but as the most representative examples of motivations to enact regulations.6 Because of the scope of the present work, the details of the cultural context and the nature of State intervention in Japan will not be described.