Competition and Growth;By Office of Fair Trading

COMPETITION AND GROWTH1
EXECUTIVE SUMMARY
The central role of competition as a driver for economic growth and innovation
is supported by a wide body of macroeconomic and sectoral evidence. We have
long known that effective competition provides significant benefits for
consumers through greater choice, lower prices, and better quality goods and
services. Competition also drives growth because it provides strong incentives
for firms to be more efficient than their rivals and to reduce their costs, and
rewards innovation.
The role of competition in driving economic growth is especially important at
times of moderate economic growth and fiscal constraints. With macroeconomic
tools likely to prove insufficient and their use restricted by the need for fiscal
consolidation, microeconomic instruments (such as the removal of unnecessary
regulatory burdens and the protection and promotion of competition) become all
the more important.
As well as the general relationship between competition and growth, this paper
looks more specifically at how competition, and competition interventions by
government or agencies, can contribute to the better utilisation of capital, labour
and natural resources, and to increased innovation and better management. It
also discusses the role competition policy can play in maximising competition’s
contribution to economic growth. It concludes that there are effectively two
important arms of competition policy: that which is pursued by government
itself, and that undertaken by the (usually independent) competition agencies.
Government can directly support and drive competition in a variety of ways. It
can choose proactively to open up markets to competition, as has been done
successfully with telecommunications and airlines. It can ensure that
government regulation generally fosters competition, for example by maintaining………Click here to read Competition and growth

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  1. […] Competition and Growth;By Office of Fair Trading. […]

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