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The Functioning of Market and Competition

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Abstract

After familiarizing ourselves with the image of man and the basic tenets of political economy, we will now analyze the functions of the market and competition as the basis of our market system. We will show that the market and competition provide an allocation-efficient result and thus a welfare optimum.

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Notes

  1. 1.

    See Mitteis, Heinrich (1976) and Hühns, Erik /Hühns, Ingeborg (1963), pp.123.

  2. 2.

    See Schäfer, Michael (2009).

  3. 3.

    See Schumpeter, Joseph Alois (1911).

  4. 4.

    Kerber, Walter p. J. (1989), p. 280.

  5. 5.

    See Dahm, Karl-Wilhelm (1993), pp. 4.

  6. 6.

    See Hay-Group (2011), p. 8.

  7. 7.

    See Leisinger, Klaus M. (1997), p. 144.

  8. 8.

    Such as in Germany during the time of National Socialism

  9. 9.

    See auch Dahm, Karl-Wilhelm (1993), p. 8.

  10. 10.

    See Pritzl, Rupert F. J./Schneider, Friedrich (1999), p. 327.

  11. 11.

    See Wiswede, Günther (1985), p. 195, Hayek, Friedrich August von (1976), p. 39, 40 and 59; Hayek, Friedrich August von (1979), p. 154ff and 167 and Noll, Bernd (2002), p. 29.

  12. 12.

    See Molitor, Bruno (1989), pp. 71.

  13. 13.

    See Max, Reinhard/Wulsdorf, Helge (2002), p. 290.

  14. 14.

    See Herdzina, Klaus (1984), p. 9.

  15. 15.

    See Conrad, Christian A. (2005), pp. 23.

  16. 16.

    See Herdzina, Klaus (1999), p. 9.

  17. 17.

    According to empirical estimations, in a polypoly – as opposed to a monopoly - the static welfare gains in one period alone constitute 10% of the GDP. This is assuming there are no secondary effects. See Scherer, F. M. (1997), p. 11.

  18. 18.

    See Berg, Hartmut (1999), p. 233. The Freiburger School sees the equivalent of democracy in individualistically oriented competition, and thus the prevention of a dictator.

  19. 19.

    See Heuß, Ernst (1968), pp. 29 for the importance of competition for the growth process.

  20. 20.

    See Hayek, Friedrich August von (1969), p. 249 and Starbatty, Joachim (1987), p. 164.

  21. 21.

    Hayek, Friedrich August von (1969).

  22. 22.

    See Schumpeter, Joseph Alois (1911).

  23. 23.

    For an explanation of “Schumpeter’s entrepreneur” see Dürr, Ernst (1987), pp. 245 and Vickers, John (1993), pp. 17.

  24. 24.

    See Drude, Michael (1991), p. 7.

  25. 25.

    Empirical proof of the positive effects from import competition on productivity can be found in MacDonald, Porter, Baily, and Gernsbach as well as in the studies from the EU-Commission on gains in welfare within the European domestic market. See Baily, Martin/Gernsbach, Hans (1995); Commission of the European Communities (1988); MacDonald, James M. (1994); Porter, Michael (1990) and Scherer, F. M. (1997).

  26. 26.

    See Conrad, Christian A. (2003a).

  27. 27.

    See Conrad, Christian, A. (2005) and Bender, Dieter (1992), pp. 419-448.

  28. 28.

    See Fox, Eleanor M. (1986), p. 983.

  29. 29.

    See Starbatty, Joachim (1983), pp. 570.

  30. 30.

    See Starbatty, Joachim (1983), p. 569 and Hildebrand, Doris (2002), p. 160.

  31. 31.

    See Smith, Adam (1776), chap. III, first paragraph.

  32. 32.

    See Schwarz, Gunter Christian/Holland, Björn (2002), p. 1672.

  33. 33.

    Max Weber had already recognized the source of the positive economic developments in Switzerland, the Netherlands, England and parts of Germany as being from the Protestant or Calvinist influence. See Ulrich, P. (1993), Sp. 1168f and Noll, Bernd (2002), p. 166.

  34. 34.

    See Schwarze, Gunter (2007).

  35. 35.

    See Wilkening, Hans-Rüdiger (2004), p. 61.

  36. 36.

    See Beutter, Friedrich (1989), pp. 56–75.

  37. 37.

    See Schefold, Bertram (1989), pp. 19–55.

  38. 38.

    See Beutter, Friedrich (1989), pp. 56–75.

  39. 39.

    See Kant, Immanuel (1785), p. 434.

  40. 40.

    See Aristoteles (1991), p. 17 or 1263a.

  41. 41.

    See Rawls, John (1999), pp. 73 and 240.

  42. 42.

    See Papst Leo XIII. (1891), No. 34; Höffe, Ottfried (1997a), p. 93; Schmidt, Heinrich (1982), p. 225 and Göbel, Elisabeth (2010), pp. 152.

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  1. University of Applied Sciences, Saarbrücken, Germany

    Christian A. Conrad

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Conrad, C.A. (2020). The Functioning of Market and Competition. In: Political Economy. Springer Gabler, Wiesbaden. https://doi.org/10.1007/978-3-658-30884-1_5

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