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Project leaders: Ajit Singh, Kevin Lee
Aims
The essential purpose of this project was to investigate whether with
de-regulation, privatisation, and growing international trade the
intensity of competition both in the UK's product markets and the
capital market has increased. How does greater competition effect
economic efficiency?
Methods
There were two kinds of methods employed in this investigation. First,
time series of data on the UK corporate performance (specifically rate
of profit, profit margins and productivity of capital) were analysed to
examine the degree of persistency displayed by these variables.
Secondly, the changes in the nature of selection mechanism and other
issues of interest in relation to the market for co-operate control were
investigated by comparing the multi-variate characteristics of various
population of firms: the acquired, the acquiring, the non- acquired,
the non- acquiring.
Results
The main work on the project consisted of:
a) further work on the data set and statistical methodology
b) devising a more general and inclusive theoretical framework
for considering the empirical results of the questions investigated in
the project
c) collaboration with Professor Alice Amsden at MIT and
Professor Burcin Yortoglu at the University of Vienna
The main economic question being investigated was (i) whether
the US economy displays greater intensity of competition than the UK in
diverse dimensions; and (ii) if so, does it matter? The underlying
theoretical premise is the concept of an optimal degree of competition
which best advances investment, technological progress and economic
growth. For this purpose, various indicators of product market as well
as capital market competitions were systematically compared between the
two countries and over time. In this form, this project also linked up
with the research project on Corporate Governance and Investment with which
the two researchers were involved.
Apart from the continuing work on these issues for the US and
UK economies, and for emerging markets, the project has been
investigating issues of multi-lateral competition policy in the era of
globalization. These are outlined in papers by Singh and Singh and
Dhumale. Singh's work also presents a critique of the 2003 E.U.
proposals for a multilateral agreement on competition and concludes
that these proposals are not suitable either from the perspective of
emerging countries or from that of the world economy as a whole. An
alternative multilateral policy framework which may better meet the
needs of emerging as well as mature countries is outlined in this work.
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