ABSTRACT
Recent events have (once again) provided evidence that the process of industrial competition does not produce a smooth path toward the optimal allocation of scarce resources. At the same time, the loss of market position by large firms and the reorganization of entire industries, especially in the airline, telecommunication, computer, and financial sectors imply that even large conglomerates or “megacorporations” are not immune from competitive forces. Thus, the recent experiment with deregulated international capital markets and accelerated growth in capital movements across countries, indicates that societies must deal with the benefits and costs of unbridled competition as an outcome of the competitive process itself: when policymakers employ an accurate conception of actual business competition, it is often difficult to make a case for “market failure.”
