Effective competition

Effective Competition is a concept first proposed by John Maurice Clark,^[1] then under the name of "workable competition," as a "workable" alternative to the economic theory of perfect competition since perfect competition is seldom observed in the real world.^[2]

J.M. Clark

's proposal resulted in extensive debate in the economic literature over the next several decades, in which Jesse W. Markham, Joe S. Bain, and many others participated.^[3]^[4] No consensus has yet been reached over which of many potential criteria should be used to judge competition to be effective, but as an alternative to identifying specific structural criteria by which to constitute effectiveness or workability, Jesse W. Markham suggested the following definition:

An industry may be judged to be workably competitive when, after the structural characteristics of its market and the dynamic forces that shaped them have been thoroughly examined, there is no clearly indicated change than can be effected through public policy measures that would result in greater social gains than social losses.^[5]

Despite the lack of consensus in the literature, the concept is often used in antitrust enforcement and public policy analysis, as a method for measuring and ensuring adequate levels of competitive performance in markets which may not be ideally structured. Charles F. Phillips, Jr. notes that "Workable or effective competition may result from conditions that are less exacting than those demanded for perfection."^[6]

References

^ https://stats.oecd.org/glossary/detail.asp?ID=3331
^ J.M. Clark (1940). Toward a Concept of Workable Competition. American Economic Review pp. 241-256
^ Sosnick, Stephen H. (1958) A Critique of Concepts of Workable Competition The Quarterly Journal of Economics pp. 380-423
^ Sosnick, Stephen H. (1968) Toward a Concrete Concept of Effective Competition American Journal of Agricultural Economics pp. 827-853
^ Markham, Jesse W. (1950). An Alternative Approach to the Concept of Workable Competition The American Economic Review p. 361
^ Phillips, Jr., Charles F. (1969) The Economics of Regulation: Theory and Practice in the Transportation and Public Utility Industries. Richard D. Irwin, Inc.

Institutional economics

Institutional Economists	Werner Abelshauser Clarence Edwin Ayres Joe S. Bain Shimshon Bichler Robert A. Brady Daniel Bromley Ha-Joon Chang John Maurice Clark John R. Commons Richard T. Ely Robert H. Frank John Kenneth Galbraith Walton Hale Hamilton Orris C. Herfindahl Albert O. Hirschman Geoffrey Hodgson János Kornai Simon Kuznets Hunter Lewis Jesse W. Markham Wesley Clair Mitchell Gunnar Myrdal Jonathan Nitzan Warren Samuels François Simiand Herbert A. Simon Frank Stilwell George W. Stocking, Sr. Lars Pålsson Syll Thorstein Veblen Edward Lawrence Wheelwright Erich Zimmermann

Key Concepts & Ideas	Accelerator effect Administered prices Barriers to entry Bounded rationality Conspicuous consumption Conspicuous leisure Conventional wisdom Countervailing power Effective competition Herfindahl index Hiding hand principle Hirschman cycle Instrumentalism Kuznets cycles Market concentration Market power Market structure Penalty of taking the lead Satisficing Shortage economy Structure–conduct–performance paradigm Technostructure Theory of two-level planning Veblen goods Veblenian dichotomy

Related Fields	Behavioral Economics Development economics Economic sociology English historical school of economics French historical school Historical school of economics Legal realism New Institutional Economics Post-Keynesian economics

Categories

Imperfect competition

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Effective competition