Posted in Marketing and Strategy Terms, Total Reads: 408
Definition: Workable Competition
Workable Competition is a situation where high degree of monopolistic power exists but there is enough competition which protects consumers from being abused due to the existing monopoly. Hence this is a workable alternative to the theory of perfect competition.
This idea was first proposed by JM Clark in 1940. He put forth that the goal of policy should be to make competition workable and not necessarily perfect. He came up with the criteria to judge whether competition was workable, which are wide ranging from the number of firms that are large as permitted by economies of scale, informative advertising, promotional expenses to not be excessive. No consensus has yet been reached on which criteria should be used to judge competition to be effective and what constitutes the workable competition.
Jesse W. Markham suggested that once can judge an industry to be workably competitive after thoroughly examining the structural characteristics of its market and the dynamic forces that shape it and there is no change that is clearly indicated than can be affected through public policy measures that could result in greater social gains than social losses.”