Freedom of competition

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Freedom of competition (also a system or social theoretical concept of competition policy ) is a concept of competition theory . According to Erich Hoppmann, it describes a situation in which there is no market power . The concept of freedom of competition was developed by Hoppmann in the 1960s and is essentially based on the ideas of Friedrich August von Hayek and Josef Schumpeter . Several additions were made to the approach in the 1980s.

Main features

According to Hoppmann, there is freedom of competition when the freedom of one market participant is not disproportionately large in relation to the freedom of another market participant. Otherwise, according to Hoppmann, there is market power of the market participant endowed with great freedom.

Competition and freedom

Hoppmann sees competition as a dynamic and evolutionary process of innovation and imitation (i.e. advance and pursuit) and search and discovery process, in which inferior problem solutions are selected. Competition thus leads to freedom of competitors and freedom in the exchange process. "Freedom" is defined as:

  • Freedom as the absence of coercion by third parties (so-called freedom of resolution )
  • Freedom as the absence of restrictions in exchange by market participants (so-called freedom of action )

Due to its positive basic characteristics, Hoppmann regards competition as a goal and not just a means; Accordingly, competition is fundamentally suitable for producing economically advantageous results.

Competition policy

State interventions in the market structure are rejected in the later works of Hoppmann, as they represent a presumption of "better" knowledge. In earlier works, however, Hoppmann advocates market power tests to forecast the effects of mergers . Furthermore, Hoppmann considers them unnecessary, since markets and structures are not given exogenously, but rather develop endogenously in competition - so an “undesirable” market structure is not per se disturbing, as it will change over time.

On the other hand, Hoppmann advocates that the competition guardians bring about market processes that include both freedom of competition and an economic advantage for both market players. The state should not define the freedom of competition as a "positively defined freedom of action" that has to be achieved. Rather, it should define by negative selection which situations inappropriately impair freedom of competition.

Practical relevance

In practice, according to the approach of freedom of competition, for example, there is criticism of the practice of merger control .