Industry Restructuring: A Case for Affirmative Action
Université Paris Dauphine; National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)
Vanessa Yanhua Zhang
Global Economics Group, LLC; Renmin University of China
May 30, 2012
Forthcoming at Annales d'Economie et Statistique
We analyze the trade-off faced by authorities envisaging a one-shot structural reform in a capitalistic industry. A structure is modeled as (1) a sharing of productive capital at some time and (2) a sharing of scarce sites or any other non-reproducible assets. These two distinct dimensions of policy illustrate the importance of a dynamic theory in which firms durably differ in several respects. Though equalization of endowments and rights is theoretically optimal, realistic constraints force competition authorities to adopt second-best solutions. Affirmative action here is the policy that recognizes the fact that, under certain circumstances, helping the disadvantaged contributes maximally to social surplus.
Number of Pages in PDF File: 25
Keywords: Competition policy, capacity accumulation, Cournot competition, asymmetric duopoly, regulatory consistency, differential games
JEL Classification: C73, L13, L40
Date posted: July 24, 2008 ; Last revised: October 24, 2012
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