Page 40 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE

and development activity, and provision of temporary support for

enterprises undergoing a difficult adaptation to new, free-market
conditions. On the other hand, state aids may inappropriately delay

structural changes necessary to render enterprises or sectors eco-
nomically viable. As in the case of trade policy, the competition office

can show how the long-run negative effects of such policies may out-

weigh their short-run benefits and suggest more direct and efficient
means of addressing the social issues that may underlie the policy.

Regarding environmental policies, the competition agency should
cooperate with the environmental agencies in order to jointly develop

framework conditions which stimulate the relevant economic agents –

households and companies – to comply with the goal of a particular policy.
This is not an easy thing to accomplish as the economic agents can respond

to such a policy with a variety of “avoidance strategies”, which are not
always taken care of by the environmental regulations. On the other hand,

some government influence is required as environmental commodities are
characterized by public good properties and external effects.

In some countries government procurement practices are a form of

state aid, with the state purchasing goods and services from favored
enterprises at higher than market prices. The competition office can urge

that government procurement be conducted in a transparent and com-
petitive fashion that gives all qualified sellers an equal opportunity to

compete. The agency can help to develop procurement procedures that
ensure competitive outcomes. It can also assist the government in

adopting measures that help to prevent bid rigging and price-fixing on

government contracts. In virtually all countries, cartel conduct in
government procurement is a serious problem.

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