Page 36 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE

discouraged by failures. National economic policies are often the result

of compromise. The role of the competition advocate in the formation of
trade policy is to ensure that policymakers and the public at large are

fully informed of the benefits of liberalized trade to competition and
consumer welfare.

Economic regulation

Competition advocacy can play an important role in the legislative
process in transition and developing economies. Often the legal system

in these countries undergoes dramatic change in a relatively short period

of time, and it is important that competition policy be established in the
new regime as cohesively as possible. The competition agency should

strive to ensure that competition rules are properly and consistently
inserted into new legislation and regulations where appropriate.

The competition agency should also be active in promoting
competition in regulated industries. Recent technological developments and

rethinking by economists have questioned the traditional arguments

advanced for economic regulation of sectors (such as electricity and
telecommunications) previously considered natural monopolies. Not all

aspects of the operations of enterprises in these types of sectors necessarily

display increasing returns to scale such that there is room for only one or a
few firms in the market. Often the monopoly rights granted by the

government are extended through vertical integration into economic
activities that can be subjected to competitive pressures. In many cases it is

possible to separate natural monopoly elements from potentially
competitive activities and the regulatory functions from commercial

functions, and also create several competing entities through restructuring.

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