1st Edition

The Economics of Competition The Race to Monopoly

By George G Djolov Copyright 2006
    344 Pages
    by Routledge

    346 Pages
    by Routledge

    A comprehensive examination of the ways competition and innovations level the playing field in the free market

    The Economics of Competition uses the South African pharmaceutical industry as a case study to cogently challenge accepted economic and regulatory views on competition and monopoly, then re-establishes and emphasizes the importance of foundational economic principles. The book comprehensively explores the concept that monopoly is self-limiting within unrestricted competition, as well as the various market features of competition, innovation, and market power. This detailed examination broadens understanding of the economics of competition for both scholars and practitioners.

    Competition is seen as a continuous process in a free market. The Economics of Competition thoughtfully explores the competitive process in its two mechanisms, the transfer of market share from one rival to another, and innovation of a new product, new method of production, new market opening, or new source of supply of raw materials. The dynamic nature of the marketplace is thoroughly examined from the author's inside view of the South African pharmaceutical industry. This provides a rare opportunity to closely examine an industry considered to be a monopoly while actively applying economic theories of competition and freedom of choice. The effects of public policy, legislation, and pricing regulations are discussed in detail. The book has several tables and figures to enhance clarity and is extensively referenced.

    The Economics of Competition discusses:
    * monopoly and rivalry in the free market
    * theories of perfect competition
    * innovation as a controlling variable
    * pricing and price differentiation
    * barriers to competition—including historical and contemporary legislative barriers
    * horizontal mergers and acquisitions as a key aspect of market power
    * and more!The Economics of Competition is insightful, thought-provoking reading for policymakers as well as anyone practising antitrust law, microeconomics, industrial economics, managerial economics, marketing strategy, theoretical public health, and students and educators of marketing and economics.

    • Foreword (W. Duncan Reekie)
    • Preface
    • Acknowledgments
    • Chapter 1. Introduction
    • Chapter 2. Competition and Monopoly Power
    • Chapter 3. Perfect Competition
    • The Social Costs of Monopoly Power
    • The Persistence of Cartels
    • The Price-Cost Margin
    • Chapter 4. Departures from Perfect Competition
    • Innovation and Competition
    • Erosion of Monopoly Power Under Innovation
    • Chapter 5. Rivalry and the Competitive Process
    • The Clemens-Cocks Model
    • Downie’s Conjecture of the Competitive Process
    • Chapter 6. Barriers to Competition
    • Economies of Scale
    • Product Differentiation
    • Absolute Cost Advantages
    • Redefining Barriers to Competition
    • Regulation and Economic Welfare
    • Chapter 7. Regulating the Competitive Process
    • Chapter 8. The Structure-Conduct-Performance Model
    • The Cournot Model
    • The Stackelberg Model
    • The Bertrand Model
    • Concentration in Practice
    • Chapter 9. Firm Dominance and Price Decisions
    • Excessive Pricing
    • Pricing Below Marginal Cost or Average Variable Cost
    • Price Discrimination
    • Marketing
    • Chapter 10. Measuring Market Concentration
    • Calculating Concentration Under Data Shortages
    • Market Definition and Concentration
    • Chapter 11. The Market Structure of the SA Pharmaceutical Industry
    • The Private Sector
    • The Public Sector
    • The Evolution of the Public and Private Sectors
    • The Legislature and the Industry
    • Parallel Importation and Single-Exit Pricing
    • Compulsory Licensing and Generic Substitution
    • Chapter 12. The Pharmaceutical Industry and Monopoly Power
    • Testing for Proposition 1
    • Testing for Proposition 2
    • Testing for Proposition 3
    • Chapter 13. The Impact of Mergers and Acquisitions
    • The Private Sector
    • The Public Sector
    • Chapter 14. A Microeconomic Inspection of the Industry
    • Sample-Size Selection
    • The Private Market
    • The Public Sector Market
    • Synopsis of the Microeconomic Study
    • Chapter 15. Conclusion
    • Notes
    • Bibliography
    • Index


    George G Djolov is Associate Professor Extraordinary (quantitative methods) at the University of Stellenbosch Business School, and Head of the Socio-Economic Integration Unit at South Africa’s National Statistical Office, Statistics South Africa. Professor Djolov’s doctoral thesis has been distinguished in the top 11 at the 2013 PhD Thesis Competition of the European Doctoral Programmes Association in Management and Business Administration (EDAMBA). Professor Djolov holds a Doctorate in Business Administration from the University of Stellenbosch, as well as Master’s and Bachelors’ degrees of Commerce from the University of the Witwatersrand. Professor Djolov’s professional interests, and publications record, are in business statistics, industrial economics, and managerial economics. Professor Djolov is the past Executive Chief Economist of the federation of South Africa’s chambers of commerce and industry, CHAMSA. He was formerly the Chief Economist of the Pharmaceutical Manufacturers’ Association of South Africa, the body representing local and multinational ethical drug companies in South Africa. He is a member of the European Institute for Advanced Studies in Management. He is a past member of the European Association of Research in Industrial Economics and the Eastern Economic Association.

    "Extremely useful for students and teachers of microeconomics, industrial economics, industrial organization, managerial economics, and marketing strategy."

    Asia-Pacific Business Review