Microeconomics Case Study

Hong Kong Contemplates Competition Law: In Whose Interest?

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Abstract:
This case study helps in analysing the need for a competition law for Hong Kong, which was ranked 11th in Global Competitiveness Index (2008–2009), while providing scope to debate on the ideal number of competitors (in an industry) in an economy; in this case – conglomerates. It also serves as a platform for debate over the efficacy of the anticipated law in controlling the ‘acquired’ monopolies. Can the government tame the monopolists?

For a country nurtured by the early promoter of capitalism, the Great Britain, Hong Kong has bestowed all its blessings on the harbingers of capitalistic ideas and ideals. However, ironically the country has become a silent witness to the growing dominance of the monopolies (across different industries) that are smart enough to circumvent the existing laws. In a bid to curb the ‘undue’ market dominance of these players, the government is contemplating on introducing a competition law. The objective is to do greater good to the economy. Now, the question is – Does a competition law serve the purpose in a miniature economy that is too cluttered for new companies and further investments?

Pedagogical Objectives:

• To analyse the ideal number of competitors in an industry in an economy
• To understand the relationship between competitiveness of an economy and the competition law
• To understand the efficacy of introducing competition law in an already competitive economy like Hong Kong.

Keywords : Competition, Competition laws, Monopoly, Global Competitiveness Index, Hong Kong, Hong Kong’s Competitive Law, Hutchison, Lika-Shing, Guanxi, Tariff Barrier, Herfindahl-Index