Effective competition is a concept first proposed by John Maurice Clark, then under the name of "workable competition," as a "workable" alternative to the

economic theory Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes ...

of perfect competition, as perfect competition is seldom observed in the real world. His proposal resulted in extensive debate in the economic literature over the next several decades in which George W. Stocking Sr.,

George Stigler George Joseph Stigler (; January 17, 1911 – December 1, 1991) was an American economist. He was the 1982 laureate in Nobel Memorial Prize in Economic Sciences and is considered a key leader of the Chicago school of economics. Early life and e ...

Jesse W. Markham Jesse William Markham (April 16, 1916 – June 21, 2009) was an American economist. Markham was best known for his work on antitrust policy, price theory and industrial organization. Markham was the Charles Edward Wilson Professor of Business Adm ...

, Joe S. Bain, and many others participated. No consensus has yet been reached over which of many potential criteria should be used to judge competition to be effective, but as an alternative to identifying specific structural criteria by which to constitute effectiveness or workability,

suggested the following definition:

An industry may be judged to be workably competitive when, after the structural characteristics of its market and the dynamic forces that shaped them have been thoroughly examined, there is no clearly indicated change than can be effected through public policy measures that would result in greater social gains than social losses.

Despite the lack of consensus in the literature, the concept is often used in antitrust enforcement and

public policy Public policy is an institutionalized proposal or a decided set of elements like laws, regulations, guidelines, and actions to solve or address relevant and real-world problems, guided by a conception and often implemented by programs. Public p ...

analysis, as a method for measuring and ensuring adequate levels of competitive performance in markets which may not be ideally structured. Charles F. Phillips Jr. noted, "Workable or effective competition may result from conditions that are less exacting than those demanded for perfection."Phillips, Jr., Charles F. (1969) ''The Economics of Regulation: Theory and Practice in the Transportation and Public Utility Industries.'' Richard D. Irwin, Inc.

References

{{Authority control Imperfect competition