Populism, Fairness and Competition: Should We Care and What Could We Do?

17 Pages Posted: 5 Nov 2019

Date Written: October 30, 2018

Abstract

The rise of populism in a number of countries is one of the most visible signs of the weakening of enthusiasm for trade liberalization and market competition. Market competition is increasingly denounced as leading to unfair results by those who lose jobs, and in some cases risk losing their employment prospects because of the pressure of competition, or those who see their wages stagnate or be reduced. Their perception is that pro-competitive policies benefit capitalists and a small coterie of highly skilled workers to the detriment of the low-skilled majority. In a number of countries there have been calls by politicians to reconsider the trade liberalization policy which was actively pursued in recent decades and to change the standard applied by competition law enforcers from a strict consumer welfare standard to a consideration of the trade-off between efficiency and fairness. The competition community has, to a large extent, strongly resisted such possibilities, arguing that protectionist policies had failed in the past and that the concept of fairness is at best vague, lack economic foundation, and could lead to a weakening of incentives to achieve efficient static and dynamic performances. The article examines three issues related to this debate. First, we examine the theoretical and practical reasons for which some categories of workers lose in the competitive process. Second, we discuss the notion of fairness and the contribution of behavioural economics to the exploration of what people consider to be fair or unfair in vertical relationships (i.e. between employees and employers or between consumers and suppliers). Third, we discuss alternative ways in which competition authorities could reconcile fairness and efficiency in their advocacy or enforcement activities.

Keywords: Competition, populism, inequality, fairness

JEL Classification: D9, J42, J48, J61, J62, K21, L10, L49

Suggested Citation

Jenny, Frederic, Populism, Fairness and Competition: Should We Care and What Could We Do? (October 30, 2018). Available at SSRN: https://ssrn.com/abstract=3476227 or http://dx.doi.org/10.2139/ssrn.3476227

Frederic Jenny (Contact Author)

ESSEC Business School ( email )

3 Avenue Bernard Hirsch
CS 50105 CERGY
CERGY, CERGY PONTOISE CEDEX 95021
France

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