Optimal Competition: A Benchmark for Competition Policy

Research output: Working paperDiscussion paperOther research output

302 Downloads (Pure)


This paper introduces optimal competition: the best form of competition in an industry that a competition authority can achieve under the information constraint that it cannot observe firms' effciency levels.We show that the optimal competition outcome in an industry becomes more competitive as more money is spent in the industry, as the competition authority puts less weight on producer surplus and more weight on employment.The relation between competition and entry costs is U-shaped.Finally conditions are derived under which Cournot competition is too competitive compared to the optimal competition outcome.
Original languageEnglish
Place of PublicationTilburg
Number of pages41
Publication statusPublished - 2003

Publication series

NameCentER Discussion Paper


  • competition
  • trade policy
  • trade liberalization
  • regulations
  • benchmark


Dive into the research topics of 'Optimal Competition: A Benchmark for Competition Policy'. Together they form a unique fingerprint.

Cite this